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Veronica Bulman Veronica Bulman

A new accounting regulation could have a major impact on office lease terms. ASC 842 is now in effect for public companies, as of December 15, 2018, and will come into effect for private companies on December 15, 2019, and it sets a new standard for leases. According to Veronica Bulman of RSM, the new standard will require lessees, or tenants, to recognize assets and liabilities associated with most leases. This new requirement could encourage companies to sign shorter-term leases.

“While the bookkeeping requirements of long-term leases under the rule require significant data tracking, companies can avoid the issue entirely by moving to short-term leases, which can continue to be recognized over the term of the lease on a straight-line basis,” Bulman, a senior real estate manager at RSM, tells GlobeSt.com. “ASC 842 permits lessees to make an accounting policy election by class of underlying asset for leases with lease terms of 12 months or shorter.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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