Companies Brace To Put Leases On Balance Sheets

Posted by Bramasol Leasing Administration Team on Mon, Mar 12, 2018 @ 04:17 AM

LeaseAdministration-HotTip.jpgThis recent article in Global Finance provides an excellent overview of challenges facing companies regarding compliance with new Lease Accounting standards, ASC 842 & IFRS 16, "Companies Brace to Put Leases on Balance Sheet".

Some highlights from the article are as follows:

"It’s not just 2019-and-forward numbers that need to be stated. The standards also require restatement of prior years’ balance sheets. While the international standard requires all leases to be clearly delineated, the US GAAP standard parses some fine points, exempting many small-value or short-term leases. It also exempts leases of intangibles, mineral rights, inventory, timber and assets under construction."

"Restating the books won’t be a fully automated task. Even technologists acknowledge that there’s no downloadable magic wand that will move the leases from the footnotes into the accounting equation.

The difficulties start, as they often do, with the data gathering phase.

“Most companies don’t have this end of the enterprise electrified,” says Pete Graham, SAP’s director of finance solutions and mobility. “Most lease data still resides in paper contracts.”

He cites the transportation, retail, pharma and oil-and-gas sectors as the ones most impacted by the accounting changes. They, presumably, become the ones that will need to explain the new guidance to the stock analysts and rating agencies."

So, where do you go from here?

As a recognized industry innovator in transformative Office of the CFO solutions and the clear leader in helping companies implement recent major changes to Revenue Recognition standards, Bramasol has now also jumped out ahead of the curve to create strategic and tactical implementation solutions for ASC 842 and IFRS 16 lease accounting changes.

All companies, whether lessors, lessees or both, need to leverage the process of changing their lease management methodologies. This will allow them to gain better visibility of their lease portfolios, streamline the process of lease management and reduce overall costs.

Our holistic approach assures Compliance with the new standards while also providing a structured solution for Optimization of all lease administration and portfolio management and an integrated system for Transformation of how leasing is handled within overall end-to-end business processes.

Companies Brace To Put Leases On Balance Sheets_blog-graphic-12-mar-updated.jpg

For more information, visit the Bramasol Leasing Solutions web page.


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Topics: Leasing-Hot-Tips

FASB Update to ASC 842 Provides Relief on Easements and Rights of Way Accounting Methods

Posted by Bramasol Leasing Administration Team on Sun, Feb 18, 2018 @ 05:25 PM

LeaseAdministration-HotTip.jpgAs the January 2019 deadline for implementing new lease accounting standards (ASC 842 and IFRS 16) approaches, FASB has been addressing a number of issues that arise with regard to transitioning from current regulatory practices to the new standards. 

As part of this evolutionary process, FASB has issued Accounting Standards Update 2018-01 "Land Easement Practical Expedient for Transition to Topic 842".

This update will be of particular importance for industries such  as Oil & Gas, Telecommunications, Utilities and other sectors that traditionally depend heavily on easements and rights of way to conduct their business.

In connection with the FASB’s transition support efforts, a number of stakeholders in these industries have inquired about the application of the new lease requirements in Topic 842 to land easements. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose. 

Key provisions of the update are as follows:

"To address stakeholder concerns about the costs and complexity of complying with the transition provisions of the new lease requirements, the amendments in this Update provide an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current leases guidance in Topic 840.

An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connection with the adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease."

Key Points of FASB Update_TuesdayTip_ASC842.jpg

Click Here to Read the Entire Update 2018-01 to Topic 842

Click Here for More Information on Bramasol Lease Accounting Solutions


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Topics: Leasing-Hot-Tips

FASB Proposes Improvements to Lease Standard Implementation

Posted by Bramasol Leasing Administration Team on Mon, Jan 8, 2018 @ 05:07 AM

LeaseAdministration-HotTip.jpgOn January 5, 2018, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) regarding the new lease accounting standard ASC 842.

The proposed ASU is intended to reduce costs and ease implementation of the Leases standard for financial statement preparers.  Stakeholders are encouraged to review and provide comment on the proposed improvements by February 5, 2018.

Two key proposed changes in this ASU deal with comparative reporting during the transition period and a practical expedient for simplifying the requirements to separate nonlease components of a contract.  Summaries of the proposed changes are below.


"Comparative Reporting at Adoption The amendments in this proposed Update would provide entities with an additional (and optional) transition method to adopt the new lease requirements by allowing entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with the request by preparers. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which the entity adopts the new lease requirements would continue to be in accordance with current GAAP (Topic 840), including disclosures." 

Separating Components of a Contract:

"The amendments in this proposed Update would provide lessors with a practical expedient, by class of underlying assets, to not separate nonlease components from the related lease components and, instead, to account for those components as a single lease component, if both of the following are met: 1. The timing and pattern of revenue recognition for the nonlease component(s) and related lease component are the same. 2. The combined single lease component would be classified as an operating lease. A lessor electing this proposed practical expedient would be required to disclose the class or classes of underlying assets for which it has elected the practical expedient and the nature of the nonlease components included within the single lease component."


Read the FASB Press Release Here.

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Topics: Leasing-Hot-Tips

SEC Office of Chief Accountant Urges Careful Planning for Implementing ASC 842 Lease Standard

Posted by Bramasol Leasing Administration Team on Mon, Jan 1, 2018 @ 06:44 AM

LeaseAdministration-HotTip.jpgWith arrival of 2018, many companies are now shifting into a higher gear toward implementation of the new lease accounting standards, ASC 842 and IFRS 16. 

In recent remarks, Michael P. Berrigan, Professional Accounting Fellow, Office of the Chief Accountant, SEC, provided an update on key implementation issues and alerted companies of the importance of careful implementation planning - starting as soon as possible.

Among the issues that Berrigan emphasized were:

  • Identification of contacts that represent or contain a lease is a key step.
    "This step is necessary to fully assess the scope of contracts subject to the new standard. Once the complete inventory of contracts is identified and analyzed, I believe a company can among other items, better assess the additional level of effort required for implementation."

  • Transition guidance differs from the guidance applied on a go-forward basis under ASC 842.
    "I would encourage entities to educate themselves on these differences during implementation and continue to follow the Financial Accounting Standards Board’s (“FASB”) recent standard setting activities to allow sufficient time to gather relevant information to apply both the transition and general provisions of the standard."

  • Careful Implementation Planning, Management and Oversight are Necessary
    "Leveraging lessons observed from the revenue implementation efforts, I encourage entities to plan and manage lease implementation activities to allow for adequate time to formulate reasonable judgments in the application of the standard and evaluate any necessary changes in Internal Control over Financial Reporting (“ICFR”) that will be required to support ASC 842."

Click here to read the full remarks from Mr. Berrigan.


Click Here to Learn More About Bramasol Solutions for Lease Accounting



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Topics: Leasing-Hot-Tips

Kick-off Meeting for New SAP Leasing User Group on December 5, 2017

Posted by Bramasol Leasing Administration Team on Mon, Nov 27, 2017 @ 05:07 PM

LeaseAdministration-HotTip.jpgWe are excited to announce the formation of a new SAP Leasing User Group and pleased to invite you to the first online meeting:
December 5, 2107 at 9 AM PST - 12 PM EST.

The purpose of the Leasing User Group is to bring together SAP, customers and partners in a community to share information on the latest features, roadmap and updates on the SAP Lease Administration by Nakisa (Lease Administration) and SAP Real Estate Management (ReFX) solutions.  

You will hear from the SAP product leaders, Pete Graham and Tom Andersen, as well as, Nakisa and others.   Product experts will be on hand to answer your questions live.

Click Here to Register to Attend the Leasing User Group Kickoff Meeting


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Topics: leasing, Leasing-Hot-Tips

Why Lease Admin Software Must Integrate with Your ERP System

Posted by Bramasol Leasing Administration Team on Mon, Oct 30, 2017 @ 06:16 AM

LeaseAdministration-HotTip.jpgAs companies look ahead to achieving compliance with new lease accounting standards, ASC 842 and IFRS 16, this implementation process also provides an excellent opportunity to significantly improve overall efficiency and effectiveness of enterprise-wide lease administration methodologies.

One of the key opportunity areas is integration between lease administration software and core ERP systems.

Native integration with your existing ERP can provide key benefits, including:

  • Two-way data flows between core ERP system and Nakisa or REFX system
  • Asset accounting, fixed asset, materials and payments flow between ERP system to SLAN and REFX
  • Less customization with minimal maintenance requirement
  • Complete visibility of your leases in the ERP system for easy tracking and traceability 
  • Disclosure reporting for an end-to-end system



SAP Lease Administration by Nakisa is a purpose built end-to-end lease accounting and administration solution that provides access to company-wide lease data, with the visibility and traceability needed to support and comply with the new regulatory standards.

The SAP Real Estate Management solution is a fully integrated sub component of SAP Finance that
provides a simplified approach to the leasing solution landscape by elimination of complex financial
interfaces, reduction in the number application and real time valuation of finance leases.

Seamless coordination between Lease Administration and Asset Accounting is critical for proper
classification and valuation. By integrating seamlessly with core ERP  platforms, both Lease Administration by Nakisa and, SAP Real Estate Management eliminate any problems with operational silos between these key functions, thereby improving accuracy, auditability and overall administration efficiency. 

As a partner of both SAP and Nakisa, we provide a holistic view to the impact the new Leasing standard will have on your organization. Our methodology and approach helps ensure that you can meet the upcoming changes to the standards. Bramasol works with you to evaluate the system changes needed under the new regulations, determine how significant they will be going forward, and lay out a path toward implementation with an emphasis on the impact to the SAP system. 

For more information on Bramasol's lease accounting services, visit https://www.bramasol.com/solutions/leasing/ 

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Topics: Leasing-Hot-Tips

ASC 842 and IFRS 16 Lease Accounting is Different for Real Estate vs. Equipment

Posted by Bramasol Leasing Administration Team on Mon, Oct 9, 2017 @ 06:33 AM

LeaseAdministration-HotTip.jpgIn 2016, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issued new standards for lease accounting: IFRS 16 & ASC 842, which must be implemented by 2019. Both IFRS 16 and ASC 842 are the result of a joint effort between the IASB and FASB to meet the objective of improved transparency, comparability and financial reporting.

These changes will impact virtually all companies, whether lessors or lessees. Regardless of your company's size or industry, under the new standards your balance sheet will be different. 

When putting together your compliance plans for ASC 842 and IFRS 16, it is important to understand that solutions for real estate leases vs. equipment leases require very different features and capabilities.

Real estate leases tend to include specific issues such as tenant improvements, utilities, triple-net expenses, sub-leasing contracts, space utilization tracking, taxes, etc. that are not applicable for equipment leases.

On the other hand, equipment leases have a myriad of potential factors that need to be addressed by lease accounting solutions including, service contracts, maintenance schedules, trade-in options, utilization tracking, re-sale value, etc.

Although the compliance requirements specified in the new standards apply to both real estate and equipment leases, the processes for managing and accounting for these leases need purpose-built solutions.  Some people compare it to choosing the correct bicycle for your planned route.  You wouldn't attempt to navigate a rough mountain trail in a road bike any more than you'd choose a mountain bike to compete in a road race.  Matching the solution to your needs is the best way to achieve success.

That's one reason that, at Bramasol, we have developed deep expertise for implementing and supporting  two purpose-built, best-of-breed, feature-rich solutions: SAP Flexible Real Estate Management (RE-FX) and SAP Lease Administration by Nakisa.  As part of our overall lease administration and accounting initiatives, we have also developed detailed processes for compliance and disclosure reporting for ASC 842 and IFRS 16.

Click here to learn more about Bramasol's Lease Administration solutions and services.


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Topics: leasing, Leasing-Hot-Tips

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