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Road to Compliance: Guide to Comply with FASB ASC 842

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STRATEGY POLICY INVENTORY DATA SYSTEM PROCESS CONTROL SUSTAIN 28 tangoanalytics.com ROAD TO LEASE COMPLIANCE | PROCESS etc. – that will be required to facilitate the new lease accounting calculations. According to PwC, "tax departments may identify necessary changes, or more optimal methods, related to their historical tax treatment of leases and related items. A tax change in method of accounting may be available to provide more appropriate or benefited tax reporting prospectively for leases. Specifically, tax departments may need to review the following U.S. tax accounting method items in conjunction with the adoption of the new leasing standard: • • • • For tax departments, during the adoption of the new accounting model it is important to review the data repository of the organization's entire lease portfolio, inclusive of renewal options, lease terms, payment schedules, etc. from both a financial accounting and income tax perspective. This will enable companies to effectively: • • • • • Characterization of leases (i.e., sale, lease, or financing) Timing of income or expense under IRC Section 467 Treatment of tenant improvement allowances Treatment of lease acquisition costs Identify differences between the current standard and new standard Inventory all existing leases and deferred income tax items associated with the leases Assist in the computation and reconciliation of book/tax differences Assess federal, state, and international tax impacts Implement a process to properly characterize a lease transaction under the new standard on a go forward basis, while at the same time assessing the tax treatment of each lease transaction." PROCESS

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