Newmark’s (Newmark) Valuation & Advisory (V&A) practice has issued a white paper analyzing recent updates to FASB accounting standards to promote consistency and improve the transparency of financial reporting by requiring companies to recognize lease assets and liabilities on their balance sheets. In the piece, Executive Vice President Marc R. Shapiro, MAI, MRICS, and Senior Managing Director John Corbett, MAI, ASA, FRICS, address key changes and provisions that affect both lessors and lessees.
Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), replaces the U.S. Generally Accepted Accounting Principles detailed in Topic 840, Leases. Lessees will be now required to recognize an asset and liability for substantially all leases. Under the new guidance, the user community and regulators will have access to the information necessary to understand a reporting entity’s leasing activities. However, though there are some changes to the lease classification criteria, ASC 842 retains most of the criteria from ASC 840.
“This is a nuanced but important standards change that our V&A team believes will impact many of our clients,” said V&A Executive Vice President Marc Shapiro. “Our Newmark team is fully prepared to help and advise our clients through these updated guidelines.”
ASU 2016-02 becomes effective for public business entities, certain not-for-profits and certain employee benefit plans for annual periods beginning after December 15, 2018. For all other entities, it is effective for annual periods beginning after December 15, 2019.
Newmark’s V&A Financial Reporting group, a premier provider of financial reporting services, is well positioned to help companies make the transition under ASC 842. Their professionals bring a comprehensive awareness of financial reporting standards coupled with property-specific insights to deliver strategic guidance to multi-national corporations, public and private REITs, private equity groups and funds. The group is a leading industry innovator, comprising an extensive team that now exceeds 435 professionals situated across 60 locations in North and South America.
Newmark (“Newmark”), operated by Newmark Group, Inc. (“Newmark Group”) (NASDAQ: NMRK), is one of the world’s leading and most trusted commercial real estate advisory firms, offering a complete suite of services and products for both owners and occupiers. Together with London-based partner Knight Frank and independently-owned offices, Newmark’s 16,000 professionals operate from approximately 430 offices on six continents. Newmark’s investor/owner services and products include investment sales, agency leasing, property management, valuation and advisory, diligence, underwriting, government-sponsored enterprise lending, loan servicing, debt and structured finance and loan sales. Occupier services and products include tenant representation, real estate management technology systems, workplace and occupancy strategy, global corporate services consulting, project management, lease administration and facilities management. For further information, visit www.ngkf.com.
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