New Accounting for Leases in 2022: The Change is Here

WHO: Is your nonprofit leasing space or equipment of some kind? If any lease you are under is for a term longer than 12 months, then you are in for A HUGE CHANGE this year in how you account for these leases on your books!

WHAT: The accounting gods issued an accounting standard that deals with leases (ASU 2016-2 & ASC 842 for the accounting geeks out there). The bottom line is, the entire amount of your lease now needs to be booked as a liability on your books with a corresponding “right of use” asset shown as well. Making things more complicated, this new liability will need to be recorded as a loan with an imputed interest rate used to record a portion of each monthly lease payment as interest expense. Seriously, this represents the biggest change in years in accounting and will have dramatic effects to your financial statements!

• If you are wondering:
• Does this really affect my little old nonprofit? (Spoiler Alert – yes, it does!)
• Does this include things like cam charges, maintenance, taxes, etc…?
• What happens if I end my lease early?
• Where do I point the monthly rent checks to?
• Won’t this make my liabilities on my balance sheet look huge now?
• Will I still show rent expense on my Profit and Loss?
• What the heck is an imputed interest rate and what rate should I use?
• And finally…how do I do this in QuickBooks?

WHY COME: Whether you are a nonprofit bookkeeper, a CPA, or simply doing the books for your nonprofit, you are now required to implement this change in order to be in compliance with generally accepted accounting principles. If you don’t learn this from us, learn it somewhere soon!

Don’t miss this opportunity. You will be VERY glad you came!