1. Scope SBITA defined Exemptions 2. Recognition and measurement of a SBITA Subscription liability Subscription asset Outlays other than subscription payments Disclosure requirements 3. SBITA accounting example Terms Additional costs evaluation Calculation of...
Lease Accounting Articles
Stop the Scramble! Why Uploading Your Lease Documents Now Will Save You Time During Your Next Audit
Audits are stressful enough without having to scramble for documents. One way to streamline the process and reduce stress, at least for the lease accounting portion of your audit, is to ensure all your lease information is readily available and organized. That's where...
Your Accounting Software Vendor Got Acquired? Here’s What to Do Now.
So, the accounting software vendor you rely on for financial reporting, journal entries, and audit support was just acquired. Now what? While it might seem like business as usual at first, this kind of change can have a material impact. Here's your guide to...
GASB 87 Explained with a Full Example of the New Governmental Lease Accounting Standards
1. What is GASB 87? 2. GASB 87 vs. prior GASB guidance: Key differences GASB 87 lease classification What is considered a lease under GASB 87? 3. Key differences: GASB vs. FASB 4. Lessee vs. lessor accounting under GASB 87 5. Example: Accounting for a lease under GASB...
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)...
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...
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...
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....
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...
How to Replace Excel as Your Lease Accounting Solution
For many accountants, when they hear “ASC 842”, “GASB 87”, or “lease accounting," they become anxious thinking back to a very stressful deadline-driven project with significant balance sheet implications. This might be because they implemented the new lease accounting...
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...
Tips to Ace Your ASC 842 Audit
Summer is winding down, and it’s time for students to head back to school. While your children are in the classroom this fall, you can brush up on your lease accounting and post-transition audit knowledge. This blog combines recent survey data and LeaseQuery tools to...
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...
Optimize NetSuite ERP Software with Integrations
Let’s face it, when it comes to operating a business, there are a lot of reports, documents, and data to keep track of. To ensure scalability and success, executives have to stay on the ball and in control of profitability and revenue. For NetSuite users, it’s become...
2023 Accounting Tech Summit: Valuable Insights
LeaseQuery recently conducted a free virtual event to help accountants identify how technology can aid in a variety of accounting tasks and transformations. Over 750 event attendees heard accounting experts discuss how technology impacts day-to-day accounting tasks...
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...
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:...
Related Party Leases under ASC 842: Review of the Accounting Changes
Update to ASC 842 for Common Control Arrangements Common control leasing arrangements are frequent among private companies for various reasons, including tax planning and legal liability. However, private companies have found applying ASC 842 to these types of leases...
Operating Lease Accounting under ASC 842 Explained with a Full Example
1. Operating lease treatment under ASC 842 vs. ASC 840: What changed? 2. Operating lease vs. finance lease identification under ASC 842 Transference of title/ownership to the lessee Purchase option Lease term for major part of the remaining economic life of the asset...
Post-Transition Policy and Procedure Considerations for Lease Accounting
Wondering what’s next after successfully transitioning to ASC 842? Whether a company is using a lease accounting software or has minimal leases to account for manually, it’s imperative to have policies and procedures in place going forward. To ensure your...
Signs It’s Time to Break Up With Your Lease Accounting Software
With Valentine’s Day this month, love is in the air. And with love comes heartbreak. Breakups don’t just apply to relationships. They can also apply to professional partnerships. Some companies may have selected a lease accounting solution without considering 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...
Lease Purchase Options and More Intersections of Fixed Assets and Lease Accounting Explained with a Full Example
1. Capitalization of leases and fixed assets ASC 840 – Capital leases and fixed assets on the balance sheet ASC 842 – Operating leases now capitalized Accounting for finance leases vs operating leases 2. Similarities in accounting policies Capitalization thresholds –...
How to Keep Your Accounting Team Happy in 2023
According to a recent article from the Wall Street Journal, over 300,000 U.S. accountants and auditors have left their jobs in the past two years. The number of college students coming into the field isn’t enough to fill the missing positions. January is a tough time...
Documenting ASC 842 Policies and Procedures
As with any new standard update, adopting ASC 842 will require the implementation of new policies and procedures. To get a better idea of what policies and procedures should be developed, it is helpful to have a good understanding of what your auditors will be looking...
Why Fixed Asset Software Isn’t Suitable for the New Lease Accounting Standards
Prior to the introduction of the new lease accounting standard, ASC 842, many organizations grouped their leased assets along with their fixed assets. The organization likely placed assets financed with a capital lease on the balance sheet as “capital assets” and...
Don’t Ghost The New Accounting Standards
Are you afraid of the looming accounting standards? ASC 842, GASB 87, and GASB 96 may be frightening, but ghosting them isn’t the right answer. At some point, you have to approach compliance head on. While you should beware of the repercussions of noncompliance, there...
Sale-Leaseback Transactions and Accounting under ASC 842 Explained
1. What is a sale-leaseback transaction? 2. Why enter into a sale-leaseback transaction? What are the benefits of a sale-leaseback transaction? What are the disadvantages of a sale-leaseback transaction? 3. Examples of sale leasebacks 4. Identifying a sale-leaseback...
Lease vs. Buy Analysis and Calculator for Business – How to Determine When to Lease or Buy an Asset
1. Benefits of leasing vs. buying Benefits of leasing Benefits of buying Disadvantage of leasing Disadvantage of buying 2. Lease vs. Buy Analysis: Five Factors to Consider 1. How long will you need the item and how much is it worth? 2. What is feasible for your...
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...
Asset Capitalization Explained with a Lease Example
1. What is capitalization in accounting? How assets are capitalized 2. Capitalized right-of-use asset example 1: Capital/Finance lease Classification test 3. Capitalized right-of-use asset example 2: Operating lease 4. SummaryTo understand capitalization, start with...
SFFAS 54: FASAB Lease Accounting Explained with a Full Example
1. What is SFFAS 54? 2. Effective date 3. Lease definition What is a lease? Embedded leases 4. Scope Short-term lease exemption Lessee recognition Lessor recognition Discount rate 5. Example 6. SummaryWhat is SFFAS 54? SFFAS 54 is the new lease accounting standard...
Dive Into Day Two Lease Accounting
Summer is in full swing. The sun is out, the air is hot, and the pool is finally open. While vacations and pool parties are on everyone’s mind, this summer also means companies who completed their transition to ASC 842 are ready to make a splash into day two lease...
Accrued Rent Accounting under ASC 842 Explained
1. What is accrued rent? Accrued rent vs. deferred rent 2. Accounting for accrued rent with journal entries Accounting for accrued rent under ASC 840 Accounting for accrued rent and deferred rent under ASC 842 3. SummaryWhat is accrued rent? Accrued rent is a...
Lease Payments: Establishing the Lease Liability/Asset & Receivable under GASB 87
1. Measurement Lessee's lease liability Lessor's lease receivable 2. Variable payments 3. Lease and nonlease components 4. Discount rate determination 5. Summary 6. Related articlesIn order to establish and maintain compliance with GASB 87, the new governmental lease...
Determining the Correct Dates & Lease Term from a Lease Agreement under GASB 87
1. Determining which dates to capture from a lease agreement Where are the important dates in a lease contract? 2. What is the lease term? Short-term lease Additional lease term considerations Termination options Financial impact of the lease term Changing the lease...
May 2022 GASB Update: Statement No. 99 Explained (GASB 87 & GASB 96)
On May 9, 2022 the GASB issued Statement No. 99 Omnibus 2022 (GASB 99) providing clarification guidance on several of its recent statements, including GASB Statement No. 87 Leases (GASB 87) and GASB Statement No. 96 Subscription-Based Information Technology...
Initial Direct Costs under ASC 842 Explained: Summary, Full Example
1. What are initial direct costs? Definition of initial direct costs ASC 840 treatment of initial direct costs 2. Initial direct costs under ASC 842 What changed? Accounting treatment under ASC 842 3. Example: Initial direct costs under ASC 842 4. Summary 5. Related...
May 2022 FASB LEASE Summit: Important Lease Accounting Insights
On May 12, LeaseQuery hosted another virtual LEASE summit, The FASB Series, during which accounting experts explored the new FASB lease accounting standard, ASC 842. Over 700 attendees of the free CPE event heard speakers from LeaseQuery, DHG, Riveron, Grant Thornton,...
May 2022 GASB Lease Summit: Lease Accounting Advice from Industry Experts
On May 5, LeaseQuery hosted another virtual LEASE summit, The GASB Series, during which accounting experts discussed the new GASB lease accounting standards, GASB 87 and GASB 96. At the free CPE event, speakers from LeaseQuery, MGO, The Pun Group, Cherry Bekaert, and...
Lease Payments: Establishing the Initial Lease Liability & ROU Asset under ASC 842
1. Fixed payments Fixed vs. variable payments 2. In-substance fixed payments 3. Variable payments that depend on an index or rate 4. Additional payments 5. Lease vs. non-lease components Lease vs. non-lease components: Practical expedient 6. Discount rates 7. Summary...
GASB 87 & GASB 96 Efficiencies: Similarities, Differences, Adoption Tips, & More
The effective date for GASB 87 has passed, but GASB 96 is just around the corner. Many companies working towards compliance with GASB 87 can save time and resources by adopting GASB 96 simultaneously. This article provides a comparison and contrast of both standards,...
How to Conduct an Inventory of Your Leases under GASB 87
1. Scoping your leases 2. Definition of a lease 3. Exemptions Short-term leases Materiality Leases that transfer ownership Other GASB 87 exemptions 4. Finding your leases Look at your requisition process Engage the right departments Consolidate your leases in one...
Determining the Correct Dates & Lease Term from a Lease Agreement under ASC 842
1. Determining which dates to capture from a lease agreement Where are the important dates in a lease contract? 2. What is the lease term? How to determine the lease term Financial impact of the lease term 3. Summary 4. Related articlesDetermining which dates to...
Spring Cleaning for Lease Accounting: Give Your Lease Accounting a Fresh Look
Spring cleaning is an annual tradition across numerous households. It’s a great time to freshen up your home, clean out your closets, and get rid of unnecessary clutter. This spring, consider taking your cleaning a step further and de-clutter your lease accounting....
ASC 805 Business Combinations & Lease Accounting Explained
1. Accounting for a business combination Favorable and unfavorable leases Leases obtained in a business combination under ASC 840 Leases obtained in a business combination under ASC 842 Transitioning leases obtained in a business combination under ASC 840 to ASC 842...
Government Fund Accounting: GASB 87 Leases Within GASB 34 Consolidation to ACFR
1. Fund accounting in brief 2. GASB 87 lease accounting during the year Governmental fund and modified accrual leases Proprietary fund and full accrual leases 3. GASB 87 lease accounting at year-end and GASB 34 consolidation Governmental fund and modified accrual...
Lease Accounting Explained: New Standards, Lessee vs. Lessor, Changes, Calculations, & More
1. What is lease accounting? 2. Lessee vs. lessor Lessee definition Lessor definition 3. Lease accounting under the old standards 4. New lease accounting standards, changes, and full examples ASC 842 IFRS 16 GASB 87 5. Why were these changes implemented? 6. Lease...
How to Conduct an Inventory of Your Leases
1. Scoping your leases Leases defined Exemptions 2. Finding your leases Look at your requisition process Engage the right departments 3. Consolidate your leases in one place Cross-check your template for accuracy and completeness 4. Summary 5. Related articlesThere’s...
GASB Explained: Government Accounting Standards, New GASB Standards, and a Full List of Statements
1. GASB explained 2. What types of organizations report under GASB? 3. Government accounting standards 4. New GASB standards GASB 87: Lease accounting GASB 94: Accounting for public-private and public-public partnership arrangements GASB 96: Accounting for...
Lease Commencement Date and Start Date for US GAAP Accounting Explained
1. Determining the lease start date and lease term under ASC 840 2. Determining the lease start date and lease term under ASC 842 3. Examples of finding a lease start date 4. Complications and subjectivity under ASC 842 Renewal options Termination options Short-term...
How To Convince Your Board You Need a GASB Software Solution
1. Explore the pitfalls of Excel 2. Justify the investment Increased efficiency Comprehensive reporting Audit preparedness 3. Prevent employees from experiencing burnout 4. Summary 5. Related articlesWhether you’re adopting GASB 87 or GASB 96, transitioning to the new...
The Ultimate GASB Gift Guide
With the first GASB 87 effective date behind us and GASB 96 ahead of us, we’re walking in a GASB wonderland. Just like holiday shopping, it can be stressful to hunt down the perfect GASB resources for your organization. The accounting experts at LeaseQuery have...
Lease Modifications and Remeasurements under ASC 842
1. Lease modification types Modification of existing lease vs. new lease Modification to terminate all or part of the lease Modification vs. reassessment 2. Summary 3. Related articlesA lease modification is a change to the terms and conditions of a contract resulting...
Government Fund Accounting: Types of Funds and Leases under GASB 87 w/ Journal Entries
1. What is government fund accounting? 2. Different types of funds 3. Fund accounting & GASB 87 4. Summary 5. Related articlesWhat is government fund accounting? Fund accounting is a system of accounting used primarily by nonprofit and governmental entities. It...
Asset Retirement Obligation (ARO) Accounting Example for Real Estate
An asset retirement obligation (ARO) represents the legal commitment to remove certain improvements or modifications to an asset at the end of the asset’s use. The FASB’s ASC 410 Asset Retirement and Environmental Obligations (ASC 410) discusses accounting for AROs....
Accretion Expense Accounting Explained with Full Example and Journal Entries
What is accretion in accounting? Accretion is the periodic recognition of an expense associated with an increase in the present value of a liability over time. This expense is recognized as an operating expense in the statement of income. In practice, accretion...
Environmental Liabilities Accounting vs. Asset Retirement Obligations under ASC 410-30
When faced with an obligation to restore a long-lived asset or the environment surrounding it to its original condition, the proper accounting treatment is dependent upon whether the obligation is an asset retirement obligation (ARO) or an environmental obligation...
ARO (Asset Retirement Obligation) Accounting Example for Oil and Gas Production
Asset Retirement Obligations (ARO) are commonly associated with industries such as oil and gas, mining, waste disposal, or nuclear energy. Some examples specific to the oil and gas industry include oil well plugging and abandonment and underground storage tank...
Asset Retirement Obligation (ARO) Accounting under ASC 410 and ASC 842 Explained with Example
Have you ever entered into an operating lease for a building, constructed leasehold improvements, and determined based on the provisions of the lease that you are legally obligated to remove the leasehold improvements at the end of the lease? If so, then you had an...
Lease and Non-Lease Components under ASC 842: Electing the Practical Expedient
1. Identifying components Lease, nonlease, and noncomponents 2. Implications of the expedient Implications of not electing the expedient Implications of electing the expedient 3. Summary 4. Related articlesTo offer relief for the significant effort levels the...
Capital Lease Impairments under GASB 87: Example, Journal Entries
1. Lease impairment indicators under GASB 42 2. Recording an impairment loss under GASB 87 Example: Recording a lease impairment under GASB 87 3. Summary 4. Related articlesUnder the legacy GASB lease accounting model only capital leases were presented on the...
GASB 87 for Higher Education: What You Need to Know for Compliance
With the first semester of the 2021-2022 school year barreling to a close and annual reporting in the rearview mirror, it’s time to look ahead to the next big accounting project – GASB 87 compliance. The new guidance replaces lease accounting rules covered by GASB 13...
Don’t Let the New Lease Accounting Standards Spook You
Transitioning to ASC 842 can be scary. The new standards are starting to spook private organizations as they begin the implementation process. The good news is, you don’t have to navigate the unknown alone. Every good team, like the Ghostbusters or Scooby-Doo and the...
Interest Rates under ASC 842 Explained: Implicit, Incremental Borrowing, Risk-Free
1. Interest rates under ASC 842 2. Implicit rate Application of the implicit rate 3. Incremental borrowing rate (IBR) Application of the incremental borrowing rate 4. Risk-free rate Expedient option Application of the risk-free-rate Proposed FASB amendment 5. Summary...
LEASE Summit: Accounting Experts Share Key Tips for the Adoption Process
On September 23, LeaseQuery hosted another successful virtual summit to share valuable insights for private companies and government organizations preparing to adopt the new lease accounting standards. The LEASE Summit highlighted the steps essential for transitioning...
Equipment Lease Accounting under ASC 842 and the Benefits of Leasing Equipment vs. Buying Explained
1. Capital/finance lease criteria Example scenarios of capital/finance leased equipment 2. Example: Equipment lease under ASC 842 Opening calculation Amortization schedule Journal entries 3. Leasing vs. buying equipment Benefits of leasing Benefits of buying Financial...
How to Transition to ASC 842: A Step-by-Step Guide
1. Are you prepared? What are the keys to a successful transition? 2. Understanding your lease portfolio 3. Summary 4. Related articlesThe ASC 842 deadline is rapidly approaching. Private companies and not-for-profit entities adopting the new standard need to prepare...
GASB 51 vs. GASB 96: Similarities and Differences in Accounting Treatment
1. What is GASB 51? History of GASB 51 2. What is GASB 96? Why is GASB 96 necessary? 3. Similarities between GASB 51 and GASB 96 4. Differences between GASB 51 and GASB 96 5. Summary 6. Related articlesWhat is GASB 51? GASB Statement No. 51 Accounting and Financial...
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...
The Benefits of Early Adoption of ASC 842 and GASB 87
The new lease accounting standards are coming whether you’re ready for them or not. Preparing to adopt GASB 87 and ASC 842 is a formidable endeavor. While many public companies have already undergone the process, private companies are still in the midst of the...
How to Account for Leases under IFRS 16 for Small Businesses
Under IFRS 16 Leases, the new lease accounting standard that replaced IAS 17, 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...
Lease Accounting Transition Advice from the Experts
Private companies are either in the process of implementing the new lease accounting standard, ASC 842, or they are preparing for the transition. With the shift to the new standard comes a lot of questions. We gathered a few LeaseQuery accountants who have traveled...
GASB 87 Accrued Interest Example: Calculating the Liability Amortization
1. What is accrued interest? 2. Example: Accrued interest for a lease under GASB 87 Amortization schedule for the lessee Governmental fund accounting Conversion entries Proprietary fund accounting 3. Summary 4. Related articlesThe new lease accounting standard for...
Five Tips for Small Business Lease Accounting
After much delay, the compliance deadline for the new lease accounting rules is fast approaching. The new rules call for a significant change in the way companies account for their leases. All leases with terms longer than 12 months are going on the balance sheet, the...
FASB Proposes Amendment for Guidance on ASC 842 Discount Rate
On June 16, 2021, the FASB issued a proposed Accounting Standard Update (ASU), or amendment to ASC 842. The amendment affects private companies and not-for-profits that have not yet adopted ASC 842. The proposed change provides additional guidance and flexibility for...
Lease Amendment Accounting Explained: Expansion of Leased Premises
1. Accounting for amendments resulting in additional assets under ASC 840 Example: Accounting for amendments resulting in obtaining additional asset(s) under ASC 840 2. Accounting for amendments resulting in additional assets under ASC 842 Example: Accounting for...
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...
GASB 87 Sale-Leaseback and Lease-Leaseback Accounting Transactions
1. Sale-leasebacks GASB 87 requirements Quantitative example Disclosure requirements 2. Lease-leasebacks GASB 87 requirements Quantitative example Disclosure requirements 3. Summary 4. Related articlesOrganizations often enter into either sale-leaseback or...
Impact of the Lease Accounting Transition and COVID-19 on Balance Sheet Liabilities
1. Lease liabilities increase after adopting new standards 2. Private companies need to prepare for challenges ahead 3. 10 key industries affected by lease accounting compliance and economic change 4. Summary 5. Related articlesIn 2020, many companies saw an increase...
Calculating a Lease Liability Amortization Schedule in LeaseGuru Accounting Software
1. What is LeaseGuru? What is a lease liability? How to calculate the lease liability amortization schedule in LeaseGuru 2. Why should I use LeaseGuru if I can create amortization schedules in Excel? 3. Does LeaseQuery offer a solution for businesses with more than 15...
GASB 87 Disclosure Requirements for Lessees Explained with Examples
1. Qualitative disclosures 2. Quantitative disclosures Lease asset disclosure Lessee’s outflow of resources Lease liability disclosure and maturity analysis Future lease commitments Short-term leases: exempt Additional disclosures (if applicable) 3. Summary 4. Related...
Lease Accounting on the CPA Exam: Changes & What You Need to Know
1. Lease accounting changes Balance sheet recognition Lease costs and variable payments Lease classification Financial statement disclosures Lease vs. buy 2. Miscellaneous changes SOC reports Business process Data analytics Administrative 3. Summary 4. Related...
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...
GASB 87 Lessor Accounting Example with Journal Entries
1. Lessee vs lessor accounting 2. Lessor accounting under GASB 87 An example of lessor accounting for a lease under GASB 87 3. GASB 87 RFP Template 4. Summary 5. Related articlesLessee vs lessor accounting Government entity lessees reporting under GASB are required to...
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...
Financial Statement Audits for Leases: Testing
1. Completeness and existence 2. Documentation of policies 3. Accuracy of calculations 4. Presentation 5. Summary 6. Related articlesThis is the third segment of an article targeted at private companies who have not yet adopted the lease accounting standard, as well...
GASB 87 Training: 10 Resources and Tips to Ease Your Transition
In 2017, the Governmental Accounting Standards Board released GASB 87, the new lease accounting standard for government entities. Government agencies must begin applying the new guidance for all reporting periods starting after June 15, 2021. Initially, the compliance...
Leasehold Improvements Accounting and Amortization under US GAAP
1. Common examples 2. Accounting for leasehold improvements Amortization of leasehold improvements Example of leasehold improvement amortization 3. Leasehold improvements and AROs 4. Bonus depreciation and tax considerations for qualified LHIs Qualified improvement...
Financial Statement Audits for Leases: Assessing Risks and Controls
1. Assessing risks and controls Process documentation Internal control design for ASC 842 Assessing risks and controls With the implementation of the new lease accounting standard, ASC 842, new financial statement and process risks emerge for private companies. As...
Sublease Accounting under ASC 840 and ASC 842
1. Accounting for a sublease under ASC 840 2. A comprehensive example of sublease accounting under ASC 840 Straight-line amortization schedule for the head lease Accounting for an operating sublease under ASC 840 3. Accounting for a sublease under ASC 842 4. A...
How to Calculate Interest Rate Implicit in the Lease for GASB 87
1. What is the implicit rate under GASB 87? Implicit rate: Understanding GASB 87 vs ASC 842 Example of calculating the rate implicit in the lease Validating the rate implicit in the lease 2. Summary 3. Related articlesUnder GASB Statement No. 87, Leases, the majority...
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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...
Accounting for Rent Concessions under IFRS 16 as a Result of the COVID-19 Pandemic
1. Background 2. Changes to lease payments under COVID-19 3. IASB response 4. Accounting for COVID-19 lease concessions example 5. Accounting for lease concessions within the modification framework 6. Summary 7. Related articlesBackground The coronavirus pandemic...
Preparing for Your First Post-Transition Lease Accounting Audit
When the FASB released its new lease accounting standard in 2016, and GASB in 2017, lease accounting was revolutionized. Hailed as one of the biggest changes to accounting in decades, it quickly became clear that the impact on the balance sheet would be significant....
IRS Section 179, ASC 842, and the Impact on Lease vs. Buy Decisions
1. Understanding IRS Section 179 Section 179 and bonus depreciation 2. How IRS 179 affects lease vs. buy considerations 3. How new lease guidance affects lease vs. buy decisions 4. Getting it right with a collaborative decision-making process 5. Related...
Rent Abatement and Rent-Free Period Accounting under US GAAP
1. What is rent abatement? 2. Accounting for rent abatement and rent-free periods under ASC 840 and ASC 842 example Example under ASC 840 Example under ASC 842 3. Summary 4. Related articlesFor a simple operating lease, calculating the straight-line rent expense...
Lease Incentives under ASC 842 Explained with a Full Accounting Example
1. What is a lease incentive? 2. It’s a lease incentive: How do we treat it? Leasehold improvements Leasehold improvements: Lessor asset Leasehold improvements: Lessee asset Lease incentive impact to opening lease liability and ROU asset 3. Example 1: Paid at or...
Discount Rate Implicit in the Lease under ASC 842
1. What is the implicit rate under ASC 842? How to calculate the rate implicit in a lease under ASC 842 Example of calculating the rate implicit in a lease under ASC 842 Validating the calculated implicit rate If you are unable to calculate the implicit rate 2....
Potential Impairments of Leased Assets and the Right-of-Use Asset under ASC 842 and IFRS 16
1. Will I need to impair my assets due to COVID-19? 2. What is an impairment? Do you have impairment indicators? Is your asset recoverable? How do I calculate impairment? 3. Summary 4. Related articlesWill I need to impair my assets due to COVID-19? Depending on your...
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...
How to Account for Partial Lease Terminations
1. Is it a termination? 2. How to account for a termination Reassessing classification Remeasuring the lease liability Remeasuring the right-of-use asset 3. Partial termination accounting with example Approach 1: Proportionate change in the lease liability Approach 2:...
Rent Concession Accounting under ASC 842 during COVID-19: Full Explanation and Example
1. COVID-19 Background 2. Changes to lease payments under COVID-19 3. Accounting for COVID-19 lease concessions Deferral of payments Payment reductions Summary 4. Accounting for lease concessions within the modification framework 5. Related articlesCOVID-19 Background...
Improving Capital Budgeting Decisions Using Finance and Accounting Tools
1. Capital budgeting in corporate finance 2. Capital budgeting methods 3. Finance and accounting tools ERP Fixed asset systems Lease accounting systems Lease administration systems Lease vs. buy calculator Capital budgeting in corporate finance Capital budgeting is...
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...
Financial Statement Audits for Leases: Planning
Private organizations are moving closer to the required adoption date for ASC 842, Leases. The highly publicized lease accounting transition to ASC 842 will, qualitatively and quantitatively, impact a company’s financial statements in a significant manner. When...
Lease Accounting Compliance: Five Things To Remember
1. Lease accounting compliance is crucial for your organization Understand the lease accounting standards Utilize your resources Gather a full scope of your leases Look out for errors within your leases Conduct due diligence in selecting your software solution 2. What...
ASC 842 Disclosure Requirements: Example and Explanation
1. A focus on quantitative disclosures for lessees 2. Why software makes generating disclosures more accurate and efficient 3. Looking at quantitative disclosures in four “buckets” Lease costs Other information Weighted averages Maturity analysis 4. Related...
How the Lease Accounting Changes Have Impacted Balance Sheet Liabilities
When the FASB’s changes to lease accounting standards were released in 2016, it was hailed as one of the biggest changes to accounting in decades. After the implementation of the new rules began in earnest in 2019, it became clear that the magnitude of the impact on...
Lease Termination Accounting under FASB, IFRS, and GASB: Options to Terminate, Costs, and More
To terminate a lease is to cancel the agreement before the end of the specified lease term. Many lease agreements may include an option for either lessees or lessors to terminate the agreement prior to the end of the original lease term. Lease termination options can...
GASB 62 to GASB 87 – Eight Tips to Ease the Transition
This article was written in collaboration with LeaseQuery’s partner in easing the burden of lease accounting, Postlethwaite & Netterville (P&N). While the lease accounting delay for private companies and nonprofits may have been welcomed with open arms, it...
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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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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Lease Abandonment Accounting: Common Questions and a Full Example
Lease abandonment from the lessee’s perspective means precisely that the lessee is still paying for an asset they are no longer using. While the asset has in fact been abandoned by its initial renter, the landlord is still receiving payment for the property....
Lease Liability Amortization Schedule: How to Calculate It in Excel
1. What is lease liability? 2. How to create the lease amortization schedule and calculate your lease liability Create five-column spreadsheet Enter the number of periods and cash payments Enter expense formula Fill expense column Enter liability reduction formula...
How To Wake Up from these 9 Lease Accounting Nightmares
Transitioning to ASC 842, IFRS 16, or GASB 87 is a monumental undertaking. No matter which standard you’re transitioning to, you’re probably already having nightmares about numbers and spreadsheets. We know it can be scary but it’s important not to let those lease...
Audit Procedures for Leases under ASC 842
This article was written in collaboration with LeaseQuery’s valued partner, LBMC. For more information on LeaseQuery partnerships, please visit our partner page. Whether internal or external, auditors can play key roles during the adoption of ASC 842. Internal audit...
GASB 87 vs ASC 842: Five Differences from a Lessee’s Perspective
There has been a lot of material in the marketplace about the new lease standards. Up until this point, the majority of this has been focused on the new FASB guidance, ASC 842. For individuals at organizations that have been following some of the ASC 842 requirements,...
Accounting for Lease Modifications under ASC 842, Part 2: Operating to Finance
This is the second blog in our series on lease modifications and addresses a modification where the lease classification changes as a result of the modification. In this blog, we will give a comprehensive example under ASC 842 illustrating how to account for a lease...
GASB 87: Two Examples of How to Transition for Lessees
The new lease accounting standard for governmental organizations, GASB Statement No. 87, goes into effect for all reporting periods that begin subsequent to December 15, 2021. In 2019, GASB released an implementation guide to provide additional clarification on GASB...
The GASB 87 Implementation Guide Is Here
After much anticipation, the Government Accounting Standards Board (GASB) has released the Final Implementation Guide for Leases. The objective of the implementation guide is to provide additional clarification regarding GASB 87, the new governmental accounting...
The Accountant’s Journey toward Lease Accounting Adoption
The journey toward adopting the new lease accounting standards (ASC 842, IFRS 16, and GASB 87) isn’t easy - there are numerous pitfalls that can happen along the way. While the deadline for public companies has already passed, a recent decision by FASB will likely...
What Is the Early Impact of ASC 842 for Investors?
Now that public companies have completed or are in the final stages of their lease accounting transition, we can get an idea of what the ripple effect of the new lease accounting guidance will be beyond the accounting department. One of the main factors driving the...
How to Choose the Right Accounting Software for Your Business
For accountants at mid-sized and small companies, buying software isn’t a regular occurrence. Companies don’t invest as heavily in accounting as they do in marketing and IT. And when they do, the focus is often short-sighted – software is purchased to meet an...
GASB 13: A Comprehensive Example
Similar to the FASB and IASB, the Governmental Accounting Standards Board released guidance updating the accounting for lease agreements. GASB No. 87, Leases, is effective for applicable governmental entities for reporting periods that begin subsequent to December 15,...
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Building Your Lease Accounting Practice: What You Need to Know
The new lease accounting standard creates new opportunities for accounting and advisory firms. Your clients will need guidance on interpreting the standard, developing their policies, and implementing lease accounting software. But before you dive into building your...
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?...
Lease Accountant Hiring Questions: Here’s What to Ask in the Interview
Finding a gifted lease accountant is complicated. You need a project manager who can see the big picture to ensure long-term compliance. But you also need a technical accountant who’s a stickler for details. The key to finding the best talent is asking the right...
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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...
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...
When to Start Your Lease Accounting Project
For private companies, the January 1, 2021 compliance deadline is nearing and your transition should be underway. However, with all you have to do, we understand that starting and completing this huge task isn’t at the top of your to-do list. Nonetheless, beginning...
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 over 30 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 and IFRS 16, as well as GASB 87, Excel...
Lease Data for Accounting: How and What to Collect
Adopting ASC 842, IFRS 16, and GASB 87 requires you to revamp your lease accounting practices. In order to transition properly and maintain compliance going forward, you’ll need to collect comprehensive data for each of your organization’s leases. Here’s an overview...