New Lease Accounting Requirements for 2023 (for more details go to https://sao.wa.gov/bars-annual-filing/leases/)

• • Treating leases as debt not operating expenditures
• • Effective for 2022 and beyond
• • Effects lessors & lessees
  • Lease term, may include options o Important to determine short-term vs long-term lease
  • If long-term lease then that will determine your liability for Schedule 09
  • Classify your new & existing contracts o Short-term contracts (less than 1 year) & other exceptions, classify as Operating Expenditures
  • If debt issued and ownership transferred at the beginning of the contract, classify as Debt Issuance
  • If ownership transferred at the end of the contract (formerly capital lease), classify as Installment Purchase
  • Otherwise classify as Lease (longer than 1 year, no other exception & no ownership transfer involved)
  • Record payments o Operating Expenditures to appropriate operating expenditure code, no change
  • Debt Issuance to 391.P0.00 & 594.PP.60, no change
  • Installment Purchase payments to 594.PP.70
  • Lease payments to 591.PP.70
  • Use Report On or Dept to keep payments as is for internal purposes
  • Switch between Installment Purchase & Lease if ownership transfer changes
  • Schedule 9 for Leases (installment purchases should already be reported) o New ID Numbers are 263.56 (G.O.) or 263.57 (non-G.O.)
  • Beg Bal for existing leases
  • Additions for new leases or changes
  • Reductions for payments
  • Ending Bal for amount of future payments
  • Leases Note o Description
  • Amount paid in current year
  • Schedule of future payments
  • For more details go to https://sao.wa.gov/bars-annual-filing/leases/