1. IFRS 16 summary IFRS 16 lessee lease classification What is considered a lease under IFRS 16? IFRS 16 lessor accounting How to calculate the right-of-use asset under IFRS 16 IFRS 16 right of use asset accounting 2. IFRS 16 finance lease example (lessee)...
Commercial Real Estate Articles
Capital Lease Accounting and Finance Lease Accounting under ASC 842 Explained with a Full Example
1. What is a capital/finance lease? Finance lease vs. capital lease 2. Capital lease criteria under ASC 8403. Finance lease criteria under ASC 842 "Strong-form" vs. "weak-form" finance leases 4. Finance lease accounting example Determining finance lease vs. operating...
ASC 842: The New Lease Accounting Standards Explained with Examples, Effective Dates, & More
1. What is ASC 842? 2. ASC 842 effective dates 3. What is a lease under ASC 842? ASC 842 lease classifications and subtopics 4. Scope of ASC 842 5. ASC 842 lease accounting for lessees Operating lease accounting under ASC 842 and examples Finance lease accounting...
Rent Expense Explained and an Example of Straight-Line Rent under US GAAP
1. What is rent expense? 2. How has accounting for rent payments changed under ASC 842? 3. How is rent expense measured? Other considerations in rent expense measurement 4. Differences in timing of cash flows in rent payments Prepaid rent Deferred rent Accrued rent 5....
Capital/Finance Lease vs. Operating Lease Explained: Differences, Accounting, & More
1. What is an operating lease? 2. What is a capital lease / finance lease? 3. Capital/finance lease vs. operating lease criteria Transfer of title/ownership to the lessee Exercising a purchase option Lease term Present value Alternative use 4. Finance lease vs....
Deferred Rent under ASC 842 Explained with Examples and Journal Entries
1. What is deferred rent? 2. Deferred rent under ASC 842 3. Deferred rent example under ASC 842 with ROU assets and lease liabilities Deferred rent journal entries under ASC 842 for year 1 Deferred rent under ASC 840 vs. ASC 842 4. Treatment of deferred rent during...
Operating Expenses Explained: Types, Examples, Accounting, & More
1. What are operating expenses? 2. Operating expenses vs. capital expenditures 3. Types of operating expenses Cost of goods sold (COGS) Selling, general, and administrative expenses (SG&A) Depreciation and amortization Research and development (R&D) Notable...
Lessor vs. Lessee: Differences, Accounting, & More Explained
1. Lessee meaning 2. Lessor meaning Lessor vs. lienholder 3. Who are the lessor and the lessee in rental agreements? Commercial real estate Lessor and lessee in subleases Sale-leaseback transactions 4. What is lessor’s risk insurance? 5. Differences in lessor vs....
Prepaid Rent and Other Rent Accounting for ASC 842 Explained (Base, Accrued, Contingent, and Deferred)
1. Rent explained 2. Accounting for rent under the new lease accounting standards 3. Base rent Accounting for base rent with journal entries 4. Prepaid rent Is prepaid rent an asset? Accounting for prepaid rent with journal entries 5. Accrued rent Accounting for...
Overpaid Rent: 5 Ways that Businesses Overpay Rent and Don’t Know It
1. Paying invoices with incorrect payment due amounts Present value calculator 2. Annual escalations 3. Not realizing a monthly payment is not required 4. Missing renewal notice deadlines 5. Common area maintenance overpayments 6. Related articlesIndustry statistics...
Streamline Your Lease Accounting with Catch-Up Lease Actions
Accounting is often seen as a profession focused on the past, meticulously recording and reporting financial activities that have already occurred. While finance predicts the future and operations manage the present, accountants diligently keep the financial records....
The Art of Shrinking: Lease Adjustments in Real Estate Downsizing
Working from home began as a two week “temporary” experiment in March 2020 at the start of the COVID 19 pandemic. Over four years later, remote work has evolved into the new normal as companies and employees realize they can operate as efficiently, if not more...
Financial Contract Types and More Explained for CFOs and Finance Pros
Navigating corporate finance requires a solid understanding of financial agreements essential for CFOs and finance professionals. These contracts play a vital role in corporate finance, helping businesses manage risks, secure funding, and facilitate mergers and...
Unlocking the Power of Lease Accounting Data: A Guide for FP&A
Financial Planning & Analysis (FP&A) plays a crucial role as a strategic partner to the business, utilizing financial analysis and forecasting to help guide decision-making. Their responsibilities include drafting budgets and forecasts, optimizing the...
Commercial Lease Overview: Lease Types, Management, Accounting, & More
1. Understanding commercial lease agreements Commercial leases of equipment 2. Commercial lease management Lease management software 3. Commercial lease types Gross lease / full-service lease Net lease Absolute net lease or "absolute NNN lease" Modified gross lease...
Materiality, Immateriality, and Material Misstatements in Accounting Explained
What is materiality in accounting? Materiality is the accounting concept that the more significant missing or incorrect information is to an entity, the larger impact the error or omission may have on the decision-making of users of the affected financial statements....
Embracing Change: A Journey from LeaseQuery to FinQuery
I wanted to take a moment to share with you a significant milestone in our journey together. As you may have already heard, LeaseQuery has now evolved into FinQuery, marking a new chapter in our story. Read our story here Why now? This rebranding represents not just a...
CapEx vs. OpEx: Capital and Operating Expenses Explained
1. CapEx (Capital Expenditures) How is CapEx reported? 2. OpEx (Operating Expenses) How is OpEx reported? 3. Is software CapEx or OpEx? 4. CapEx vs OpEx: Which is better? 5. Summary 6. Related articlesEvery company has a variety of costs, from office leases to...
Financial Contract Management: A Guide for Finance Teams
1. What is financial contract management? 2. Benefits of financial contract management Central repository Visibility Ease of use 3. How these features facilitate budgeting Single source of truth Critical date knowledge Research effectively Visible obligations Quicker...
The Operating Budget: A Step-by-Step Approach
1. Operating budget defined What is the importance of the operating budget? Operating budget vs. capital budget 2. Creating operational budgeting goals Increasing revenue Cutting expenses 3. Largest expenses of the operating budget People expense Rent expense Saas...
Financial Contract Tracking: What You Need to Know
It's that time of year for accountants and finance professionals - the calm before the storm. The auditors left their PBC list when they were doing some interim work in November. If you can just pull together all the various contracts and supporting documentation they...
How to Replace Your Lease Accounting Solution
During many organizations’ initial implementation of the lease accounting standards, a software was selected to assist in crossing the finish line to compliance. If the selection of lease accounting software was frantic or last minute, you may not have had the...
There’s Still Time to Improve Your Lease Accounting
For many organizations, audit season is approaching. This means this is a great time to reassess your current processes and policies for lease accounting. Your organization may have only gone through one or a couple of audits after adopting ASC 842. Post-adoption, new...
NetSuite Lease Accounting: What You Need to Know
Are you considering doing your lease accounting in NetSuite? Oracle NetSuite is one of the most well-known accounting software solutions on the market. Its popularity is due to its wide range of accounting functionalities and superb customer support. While NetSuite is...
Outsourcing Your Lease Accounting: 4 Best Practices to Consider
Businesses are busy. With limited time and resources, and not enough people on staff, it may be time to pass the task of maintaining compliance under the lease accounting standards on to an accountant or consulting firm. Working with an accountant or CPA has numerous...
Corporate Budgeting for Fixed Assets, Leases, and Software
Corporate budgeting is the process of creating a detailed financial plan for an organization. It typically includes forecasting revenues and expenses, to project profits, as well as setting targets and priorities for various departments or programs. It involves...
What Is an Embedded Lease? How to Determine If You Have a Lease within a Contract
1. What is an embedded lease? A contract contains a lease when the following two criteria are met: 2. How to identify embedded leases Requirement 1: A specified asset is identified Requirement 2: Control of the identified asset is transferred to the lessee 3. How the...
Prepaid Expenses Guide: Accounting, Examples, Journal Entries, and More Explained
1. What are prepaid expenses? Prepaid expenses vs. accrued expenses 2. Accounting for prepaid expenses Accrual basis vs. cash basis Presentation on the balance sheet When do prepaid expenses hit the income statement? 3. Common examples of prepaid expenses Lease...
The Impact of AI in Accounting: Embracing the Future of Finance
In an era defined by technological advancements, the landscape of accounting is undergoing a profound transformation - and just in the nick of time. The media is flooded with warnings about the lack of accountants. As businesses seek to optimize their financial...
Fixed Asset Accounting Explained with Examples, Journal Entries, and More
1. What are fixed assets? Fixed asset examples Current assets vs. long term assets Tangible vs. intangible assets Right-of-use assets vs. fixed assets Operating vs. non-operating assets Capitalization policy and materiality Total fixed assets vs. net fixed assets 2....
ASC 840 vs ASC 842: Differences between the Old and New Lease Accounting Standards
1. ASC 840 summary Balance sheet recognition for operating leases ASC 840 to ASC 842 transition date 2. ASC 840 vs ASC 842 Determination of lease classification Lease classification criteria Lease payments, executory costs, and tenant improvement allowances Fair value...
What Nonprofits Need to Know About ASC 842
ASC 842 at a glance ASC 842 is the new FASB lease accounting standard. It governs how entities record the financial impact of their lease agreements. The biggest change is the standard now requires all public and private entities reporting under US GAAP to record most...
Right-of-Use Asset (ROU Asset) and Lease Liability for ASC 842, IFRS 16, and GASB 87 Explained with an Example
1. What is a right-of-use asset? 2. What is a lease liability? 3. Right-of-use asset under ASC 842 How to calculate the right-of-use asset under ASC 842 Right-of-use asset accounting example 4. Right-of-use asset under IFRS 16 How to calculate the right-of-use asset...
Leases Are More Than Just Real Estate & All Industries Have Leased Assets
Heads up! You may have more leases subject to compliance than you realize. Do you rent any equipment for your business? Do you have any service contracts granting you access to specific assets? If you answered “yes” to either of these questions, you likely have a...
Tenant Improvement Allowance Accounting under ASC 842 Explained with a Full Example
1. What is a tenant improvement allowance? 2. How tenant improvement allowances were accounted for under ASC 840 3. How to account for tenant improvement allowances under ASC 842 4. Tenant improvement allowances paid at or before commencement of the lease 5. Tenant...
How to Calculate the Present Value (PV) of Future Lease Payments in Excel
1. Present value of lease payments explained PV (Present Value) vs. NPV (Net Present Value) Minimum lease payments and future lease payments 2. How to calculate the present value of a payment stream using Excel in 5 steps Step 1: Create your table with headers Step 2:...
How to Find the Best Lease Management Software
If you’re in the market for a lease administration tool to help manage your leases, you’ve probably come across several options. How do you decide which lease management software is the best option for you and your company? In this article, we’ll discuss some of the...
What Is Lease Management / Lease Administration?
1. Lease management tasks Ongoing lease management Audits and reporting 2. Who's responsible for lease management 3. Lease management tools Excel Lease management software 4. What's next for lease management 5. Related articlesLease management, sometimes referred to...
Rent Deferment: 6 Tips for Negotiating a Rent Deferral with Your Landlord
1. See the landlord’s perspective 2. Know the full value of your lease 3. Use data to identify which leases to negotiate 4. Approach with a solution in mind 5. Collaborate across departments 6. Understand the accounting implications of rent deferments COVID-19 relief...