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...
US GAAP Accounting Articles
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...
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...
Bonds Payable: Understanding the Basics of Accounting for Bonds
1. What are bonds payable? Interest in bonds Discount vs. premium Issuance costs 2. Bonds payable accounting Amortization of the discount or premium 3. Summary 4. Related articlesWhen an organization requires additional funds, a common action is to borrow money from a...
SaaS / Software Subscription Accounting under US GAAP
1. The rise of software subscriptions Understanding popular pricing models in SaaS 2. How to account for software subscriptions What does the guidance say? 3. Financial statement impact of software subscriptions Accounting for prepaid subscriptions 4. SummaryThe rise...
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...
Software Capitalization Rules under US GAAP and GASB
1. Software Capitalization Rules under FASB and GASB 2. Types of software Purchased software Internally-developed software Software as a Service (SaaS) 3. SummarySoftware Capitalization Rules under FASB and GASB The capitalization of software development costs was a...
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...
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...
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:...
Depreciation Expense & the Straight-Line Depreciation Method Explained with a Fixed Asset Example & Journal Entries
1. What is depreciation? Depreciation expense Accumulated depreciation 2. Depreciation methods in accounting Straight-line method of depreciation Declining balance method of depreciation Sum-of-the-years’-digits depreciation method Units of production depreciation...
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...
What Are Fixed Assets? Fixed Assets in Accounting Explained
1. What are fixed assets? 2. What are the three types of fixed assets? 3. What are some examples of fixed assets? 4. How do you account for fixed assets? 5. How do you calculate fixed assets? 6. What are the advantages of fixed assets? 7. What are the disadvantages of...
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...
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 –...
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...
Debt Accounting under ASC 470 and GASB 34: Overview, Loans/Notes Payable, and Bonds Payable
1. Introduction to debt accounting 2. Financial statement recognition Initial measurement and recognition Short-term vs. long-term classification Subsequent measurement and amortization 3. Types of debt Secured vs unsecured debt Notes payable and loans payable Bonds...
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...
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...
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,...
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...
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...
Goodwill in Accounting Overview: Definition, How to Calculate It, and More
What is goodwill? Goodwill is an intangible asset resulting from the purchase of an entity for more than its fair market value. The concept of goodwill is used when an entity is acquiring another entity. It is recorded when the buying price is more than the sum of the...
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...
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...
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...
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...
Investment Accounting Methods under US GAAP Explained
What is an investment in accounting? You have probably heard of stock investments, and the term “investment” may lead you to immediately envision stocks, bonds, and mutual funds. While this line of thinking is correct, accountants view investments as this and much...
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...
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...
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...
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...
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...
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...
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...
Accounting for Partial Disposals of Equity Method Investments under ASC 323
1. Equity method 2. Equity method of accounting Partial disposal Example: How to account for an equity method disposal resulting in a loss of significant influence 3. Summary 4. Related articlesThis article is part of a series of articles covering equity method...
Equity Method Accounting for Distributions Exceeding the Carrying Value (ASC 323)
1. Equity method 2. Accounting for distributions exceeding carrying value 3. Cash flow classification Cumulative earnings approach Nature of distribution approach 4. Example: Accounting for an equity method investment when distributions exceed the carrying value...
Accounting for Loss from Equity Method Investments
1. Equity method 2. Loss from equity method investments Example of accounting for equity method losses in excess of investment 3. Summary 4. Related articlesThis article is part of a series of articles covering equity method accounting in accordance with ASC 323...
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...
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...
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...
Goodwill and Basis Differences in the Equity Method of Accounting (ASC 323)
1. Equity method of accounting when basis differences exist What are basis differences and how do you identify them? How do basis differences impact equity method accounting? An example of equity method accounting with basis differences 2. Summary 3. Related...
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...
ASC 350-40: Internal-Use Software Accounting & Capitalization
1. FASB internal-use software standard 2. Effective date of ASC 350-40 3. The need for clarity Capitalizable vs. non-capitalizable 4. Updates to ASC 350-40 Capitalizable vs. non-capitalizable software costs 5. Initial measurement and subsequent measurement Initial...
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...
The Equity Method of Accounting for Investments and Joint Ventures under ASC 323
1. What is the equity method of accounting? 2. When do you apply it? 3. How to determine if the equity method is applicable 4. Accounting for an equity method investment 5. Required disclosures 6. Example: Accounting for an investment using the equity method 7....
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 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...
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...
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...
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...
Lease Modification Accounting under ASC 842: Operating Lease to Operating Lease
In this blog, we will give an example of how to account for a lease modification under ASC 842 that does not expand or add additional assets to the original lease, but rather increases the lease term and changes the payment amounts. Because there isn’t an additional...
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 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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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...