In 2016, the Financial Accounting Standards Board (FASB)released a new set of lease-accounting standards that requirecompanies to change how they report on their operating leases.Instead of mentioning leases only in the footnotes of theirfilings, they will now need to report a right-of-use asset and alease liability on the balance sheet for each operating lease. Thischange was a result of a U.S. Securities and Exchange Commission(SEC) initiative to close accounting loopholes and increasetransparency into the financial position of companies.

The new lease-accounting standards are known as ASC 842, andpublic companies are required to apply them for annual reportingperiods after December 15, 2018. For public companies with afiscal-year start on the first of the year, that means theirdeadline will be January 1, 2019. Private companies will berequired to apply the standards for annual periods after December15, 2019—one year later.