Veronica Bulman VeronicaBulman

A new accounting regulation could have a major impact on officelease terms. ASC 842 is now in effect for public companies, as ofDecember 15, 2018, and will come into effect for private companieson December 15, 2019, and it sets a new standard for leases.According to Veronica Bulman ofRSM, the new standard will require lessees, ortenants, to recognize assets and liabilities associated with mostleases. This new requirement could encourage companies to signshorter-term leases.

“While the bookkeeping requirements of long-term leases underthe rule require significant data tracking, companies can avoid theissue entirely by moving to short-term leases, which can continueto be recognized over the term of the lease on a straight-linebasis,” Bulman, a senior real estate manager at RSM, tellsGlobeSt.com. “ASC 842 permits lessees to make an accounting policyelection by class of underlying asset for leases with lease termsof 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.