Lease Accounting Insights
Expert guidance on ASC 842, lease management, and industry best practices
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Lease Expense Classification: Its Broader Impact
The revised Exposure Draft on proposed Lease Accounting Changes issued in May 2013 (“the Revised ED”) contains provisions on expense classification that has broader implications than may be evident initially. For Type B leases, principally leases of property (real estate), the proposed expense is classified as lease expense and the expense recognition pattern is straight-line,…
Lease Accounting Exposure Draft: Expense Presentation Overview
In our posting earlier this month, we provided highlights of the May 2013 revised Exposure Draft jointly issued by the FASB and IASB proposing major changes to the manner in which lessees would account for their lease contracts. In that posting, we discussed the fact that leases would be classified based upon the nature of…
Revised Lease Accounting Exposure Draft Now Issued
The Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) issued a Revised Exposure Draft (“ED”) earlier this week proposing major changes to the manner in which lessees would account for their lease contracts. The Revised ED contained a number of revisions to the 2010 Exposure Draft that the Boards originally issued…
New Lease Standard: What’s Changing and When
The recent decision by the Financial Accounting Standards Board (FASB) to issue an updated Lease Accounting Exposure Draft has stirred considerable attention within the financial reporting community. This move comes after a series of delays and intense deliberations, with a close 4-3 vote in favor of issuance indicating the complexity and controversy surrounding the proposed…
The New Lease Accounting Standard and Debt-to-Equity Ratios
In the past, we have discussed various aspects of the new lease accounting standard that is currently being jointly proposed by both the FASB and the IASB. The new standard will require that all leases, except short term leases, be recognized as liabilities on the lessee’s balance sheet. This will result in a dramatic change…
Evaluating Lease Alternatives: Key Considerations
Evaluating Leasing Alternatives Many times when lessees are presented with the need to evaluate equipment or real estate leasing alternatives, the analysis of the lease focuses solely on the base rent payment terms. Limiting the analysis can be a dangerous trap and ignores key considerations that are required to fully understand financial impact of a…
Lease Accounting Update: Lease Components in Contracts
The FASB and the IASB (The Boards) met on January 30, 2013 to continue further deliberations on the Lease Accounting Project. The discussions were narrowly focused on the instances where multiple lease components are contained in a single lease contract. As examples, multiple pieces of equipment could be leased under a single lease contract, a single…
Key Updates from Recent FASB and IASB Meetings
The issuance of the final standard for lease accounting will likely be delayed until the first half of 2012. At the least, there will be another draft version of the new standard made available for review and comments. There still has not been any decision made regarding the effective date of the new standard. The…
Effective Lease Management and Accounting Tools
We have some exciting news to share with all of our readers. iLease Management LLC will soon launch a lease management and accounting tool that will meet the critical needs of lessees as they react to the new lease accounting standards and continuously try and gain efficiency in their day to day operations. As we…
Reversal of Lease Classification & Expense Recognition Changes
In our review of the FASB and IASB tentative conclusions reached in April, we noted that the Boards had agreed to introduce two classifications for lessee accounting depending upon whether the lease was considered to be a finance lease or other-than- finance lease. Both lease types would have been required to be recognized on the…
The Importance of Automating Lease Management Processes
The importance of an automated Lease Management process During challenging economic times like these, it is critically important that property lease documents and its data be easily accessible and accurately represented by the managers of the property. Property owners and managers that are not strategically using a well-defined repeatable process and lease abstracting software to…
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