Balance Sheet
Related terms
Category
General Concepts
The balance sheet is a financial statement that reports an entity's assets, liabilities, and equity at a specific point in time. ASC 842 and IFRS 16 fundamentally changed the balance sheet by requiring nearly all leases to be recognized as right-of-use assets and lease liabilities.
Why it matters
The balance sheet impact of lease accounting standards was the primary motivation for ASC 842 and IFRS 16. Before these standards, trillions of dollars in operating lease obligations were invisible to investors and analysts. Bringing leases onto the balance sheet changed financial ratios, debt covenants, and capital allocation decisions across virtually every industry.
How Arvexi handles this
Arvexi generates balance sheet-ready ROU asset and lease liability balances for every reporting period. The platform produces the journal entries needed to properly present leases on the balance sheet and generates the supplementary disclosures required by the standards.