The Financial Accounting Standards Board has published the Accounting Standard Codification Topic 842 (ASC 842), which represents a change for handling long-term leases for station equipment such as underground storage tanks, dispensers or signs.
The change will require fuel site operators to record all long-term leases as current and as long-term liabilities on their balance sheets, which will affect the business’s current ratio, debt-to-net-worth ratio and debt service coverage ratios. In turn, this could jeopardize the station’s ability to stay in good standing on loan agreements.
The effective date of ASC 842 for public companies was Dec. 15, 2018, and for private companies it is Dec. 15, 2020. Audit, tax and consulting firm RSM urges companies to not delay implementation of ASC 842 given the complexities involved. Download their white paper to learn more.