1. What is FRS 102? 2. Effective date of changes 3. Overhauling to align with global standards 4. Revised FRS 102 Section 20 vs. IFRS 16: Key comparisons in lease accounting 5. What this means for your organisation Impact and considerations 6. Next steps: Getting...
IFRS Accounting Articles
Lease Accounting Explained: New Standards, Lessee vs. Lessor, Changes, Calculations, & More
1. What is lease accounting? 2. Understanding lessee vs. lessor Lessee definition Lessor definition 3. Lease accounting under the old standards 4. Lease accounting standards: changes and full examples ASC 842 IFRS 16 GASB 87 SFFAS 54 FRS 102 5. Why were new standards...
FRS 102 vs. IFRS 16: Key Comparisons between the Lease Accounting Standards
The accounting treatment of leases has undergone significant changes in recent years, driven by a need for greater transparency and a more accurate representation of a company's financial position. Both FRS 102, the local standard used by most UK and Irish entities,...
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...
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:...
Benefits of Lease Accounting Software for Dual-Filers
The new lease accounting standards are nuanced regardless of which one you apply. Having to account for your leases under two separate standards only increases the complexities. Dual-filers face challenges single filers do not have to consider. With the right lease...
Practical Expedient in Accounting Explained: Adopting ASC 842 and IFRS 16 with Ease
1. What is a practical expedient? 2. Accounting transition methods Transition method for ASC 842 Transition method for IFRS 16 3. Transition practical expedients The package of practical expedients No reassessment of lease classification No re-evaluation of embedded...
Off-Balance-Sheet Financing (OBSF) and Liabilities Impacted by New Operating Lease Accounting Rules
1. Off-balance-sheet financing 2. Examples of off-balance-sheet liabilities 3. OBS accounting activities targeted by the Boards 4. Off-balance-sheet leases: How were they recorded? 5. Recording capital leases on the balance sheet under ASC 840 6. Benefits of...
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How to Prepare for an Audit of Your Financial Statements after Transitioning to IFRS 16 and ASC 842
You’ve collected all of your company’s leases. You’ve built your amortization schedules. You’ve created your journal entries and reports. And now, the moment of truth: your first post-transition audit. What should you expect? What will your auditors be looking for?...
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Impairment of Leased Assets and the Right-of-Use Asset under ASC 842 and IFRS 16
1. What is an impairment? Do you have impairment indicators? Is your asset recoverable? How do I calculate impairment? Subsequent accounting Reversal of impairment losses 2. Summary 3. Related articlesWhat is an impairment? In accounting, an impairment loss occurs...
Lease Data for Accounting: How and What to Collect
Accurate and complete lease data is essential for several reasons. Firstly, it ensures compliance with lease accounting standards such as ASC 842, IFRS 16, and GASB 87. Secondly, lease data significantly impacts financial statements and key metrics, influencing a...
IFRS 16 Leases: Summary, Example, Journal Entries, and Disclosures
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)...
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...
IFRS 16 vs. ASC 842 (US GAAP) Lease Accounting: What Are the Differences?
1. Transition approaches and application date 2. Scope 3. Lease classification for lessees 4. Variable payments based on an index or rate 5. Interest ratesThe international and United States lease accounting standards have been updated to provide further transparency...
IFRS 16 Disclosure Requirements for Lessees with Examples
1. Disclosure requirements for lessees under IFRS 16 2. Using software to generate accurate and efficient disclosures 3. Quantitative disclosures for lessees Amounts recognized on the income statement Maturity analysis of lease liabilities Information about ROU assets...
Accounting for Service Contracts: Software Licenses & Leases
1. Accounting for leases embedded in service contracts 2. Are software licenses considered service contracts under ASC 842, IFRS 16, or GASB 87? 3. Accounting for software as a service contracts – what’s changed 4. Subscription-based information technology...
Lease Termination Accounting under FASB, IFRS, and GASB: Options to Terminate, Costs, and More
1. Full lease termination options broken down by lessee and lessor Lessee Lessor 2. Partial termination options broken down by standard US GAAP IFRS GASB 3. Full termination due to purchase US GAAP IFRS GASB 4. Try LeaseGuru for free for ASC 842 & IFRS 16...
Incremental Borrowing Rate for IFRS 16, ASC 842, and GASB 87: Discount Rates and When to Use Them
1. Discount rate What to do when there's no rate implicit in the lease 2. Incremental borrowing rate What you need to calculate incremental borrowing rate (IBR) What not to do 3. Changes from legacy GAAP to the new standards 4. Choosing the right solution 5. Related...
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10 Topics to Consider When Creating an RFP for Lease Accounting Software
Excel used to be, or maybe still is, your “tried and true” go-to for handling lease accounting. However, for some businesses and organizations, accounting for all of their leases with Excel just isn't feasible. ASC 842 has different accounting models for finance vs...
Why Lease Accounting in Excel Will Set You Up for Non-Compliance
Excel is an accountant’s best friend. The ubiquitous software has been around for roughly 40 years and most of us can’t imagine a world without it. It seems like it can do anything. Unfortunately, to comply with FASB Topic 842, IFRS 16, FRS 102, as well as GASB 87,...
How to Account for Leases under IFRS 16 for Small Businesses
Under IFRS 16 Leases, companies are required to report all leases with terms longer than 12 months on their balance sheets, with some exceptions, and disclose more details about their lease obligations. Even for small businesses with a limited lease portfolio,...
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....
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...
Qualitative Disclosures for the New Lease Accounting Standards: What You Need to Know
Footnote disclosures are a critical component of an entity’s financial reports helping users of the financial statements better understand the entity’s operations, financial results, and significant accounting policies. Most required disclosures have a numbers section...
Interest Expense Calculation Explained with a Finance Lease Example and Journal Entries
1. What is interest? 2. What is accrued interest? 3. Interest expense calculation & journal entries 4. Interest expense for a finance lease Which reporting frameworks does this apply to? How is finance lease interest expense calculated? Interest expense formula How is...
Interest Rate Implicit in the Lease under IFRS 16 Explained
1. What is the implicit interest rate under IFRS 16? Implicit rate: ASC 842 vs. IFRS 16 2. Example: Calculate the interest rate implicit in a lease under IFRS 16 3. Summary 4. Related articlesWhat is the implicit interest rate under IFRS 16? The rate implicit in the...
Lease Accounting for Small Businesses: What You Need to Know
1. Complying with the new standards is a headache – especially in Excel 2. Investing in technology can prevent non-compliance Listen to your peers Evaluate the software’s features Analyze your budget The new lease accounting standards affect every business, no matter...
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Restatement of Financial Statements under IFRS 16 and ASC 842: What’s the Impact to Public Companies?
As the deadlines for FASB 842 and IFRS 16 get closer, many companies are realizing just how time-consuming and resource-heavy the transition process is (this 12-step guide will walk you through the lease accounting transition process). After all, you have to interpret...