Lease Accounting Guidelines for the Trucking Industry

Schneider Downs, in partnership with the Ohio Trucking Association, is pleased to announce the release of the second installment in our series of trucking industry white papers. The series is aimed at addressing the most critical issues currently facing the trucking industry. This white paper focuses on Accounting Standards Codification (ASC) 842 Leases.

 Download the Whitepaper 

Effective for all private entities for fiscal years beginning after December 15, 2021, ASC 842 requires companies to recognize essentially all long-term leases on the balance sheet. This is a significant change from the prior leases guidance which only required balance sheet recognition of capital leases (operating leases under the old guidance were disclosed and expensed as rents were incurred). Under the new guidance, companies must record a right of use (ROU) asset and lease liability at the present value of lease payments not yet paid. Income statement presentation for subsequent periods will vary depending on a lease’s classification; interest expense and amortization expense will be separately presented for finance (formerly “capital”) leases, and a single lease expense line will be presented for operating leases.

Given the changes noted above (and addressed in greater depth within the white paper), the new standard has the potential to both impact your loan covenants and cause much heartache as you move to implement the new accounting standard.  Schneider Downs recommends you begin now to review your loan covenants, inventory the leases across your organization, discuss the impacts with your certified public accountant, and consider the need for a lease software package (if you have at least 10 leases to track).

As you navigate through ASC 842 and find that your organization needs some guidance on the technical aspects of lease accounting, Schneider Downs can help. Schneider Downs has been tracking and anticipating the changes to lease accounting standards over the years and has worked extensively to understand the specifics and intricacies of the standards.

Additionally, Schneider Downs offers simpLEASE, a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. To learn more about simpLEASE visit www.schneiderdowns.com/simplease.

White Paper Topics

Between now and February 2022, we will be researching the topics below and providing you with relevant, real-time information you can use to make strategic decisions in your trucking company.

  • Driver Shortage - September
  • Lease Topics - October
  • Economic Update - December
  • ADAPT/Infrastructure - November
  • Tax Update - January
  • Cyber/Technology - February

Download any of the published transportation and logistics white papers at www.schneiderdowns.com/transportation-logistics-resources.

For more information on lease accounting, visit the Schneider Downs Our Thoughts On blog or reach out to us via email at [email protected].

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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