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eBook - Real Estate Leases Accounting and Business Considerations for Implementation under ASC 842 / IFRS 16

Posted by Bramasol Leasing Administration Team on Tue, Jul 31, 2018 @ 04:56 AM

In February 2016, the Financial Accounting Standards Board IgnitePossible-HotTip200x130

(FASB) issued Accounting Standards Update (ASU) 2016-02 (“ASC 842”) Leases, which provides new guidelines that change the accounting for leasing arrangements. The new leasing standard becomes effective in fiscal years beginning after December 15, 2018

The primary purpose of the standard is to address the current accounting treatment of operating leases which are deemed to be off balance sheet financing arrangements and are only disclosed via a company’s financial footnotes in the “Commitments and Contingencies” footnote. Upon the adoption of ASC 842, for every identified lease, companies will be required to create a lease liability calculated as the present value of the future fixed payments and a corresponding asset (“right of use” asset).

The right of use asset will be amortized over the life of the lease. The income statement will be impacted by a straight-line lease expense item that would essentially contain an interest component with the amortization of the asset being the plug-in order to achieve straight line lease expense over the life of the lease. One of the key challenges of adopting the new standard will be for companies to assess and apply the incremental borrowing rate applicable to them which will be used in the present value calculations for the capitalization of lease liability and right of use assets related to leases.

The new leases standard will significantly affect lessees and lessors in the real estate industry, including their considerations related to non-lease components, initial direct costs, and accounting for sale- leaseback transactions. In addition, real estate lessors will need to understand the standard’s broader implementation implications for lessees as well as the potential for changes in tenant behaviors.

eBook Real Estate Leases ASC842  IFRS16 TueTip

This eBook also addresses the three most common forms of real estate lease;

  • Net Leases or triple net lease,
  • Modified Gross or Base year Leases and
  • Gross Leases

Lessees and lessors are required to separate lease components and non-lease components (e.g., any services provided) in an arrangement and allocate the total transaction price to the individual components. Lessors would perform the allocation in accordance with the guidance in the new revenue recognition standard, and lessees would do so on a relative stand-alone-price basis (by using observable stand-alone prices or, if the prices are not observable, estimated stand-alone prices).

This eBook will help you explore different accounting treatment for property taxes and insurance, Variable Lease Payments, Initial Direct Costs, Sale-Leaseback Accounting, and at the end best part is Business Impact and Implementation Considerations.

Download the eBook now

As crunch time is here for ASC 842 and IFRS 16 compliance, Bramasol can still help you comply on-time. Ask us how!

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Topics: SAPLeaseAdmin, IFRS16, RLCS, Leasing Solution, ASC 842

Watch how Bramasol helped a Leading Multinational Retail Giant comply with Leasing Standards ASC 842 and IFRS 16

Posted by Bramasol Leasing Administration Team on Thu, Apr 5, 2018 @ 05:50 AM

The customer is a Leading Global Organization and Multinational Retailing Corporation with annual revenues in excess of US$480 billion and which is one of the largest private employer in the world with over 2 million employees. As an international company, our customer is impacted by the new lease regulations ASC842 and IFRS16 that will take effect from January 2019. These new standards will change the way balancing & handling of lease contracts is performed and will require the company to report almost all lease contracts on the balance sheet, rather than off balance sheet.

The Company is not an early adopter of the standards, but needs to load its leases as part of a first release by March 2018 using the old standards (ASC 840 and IAS17) for North America, Europe, Latin America & Asia Pacific. This is a major challenge, since it involves around 10,000 leases distributed amongst about 950 company codes.


As leading co-innovation partner with both SAP & Nakisa, Bramasol provided a holistic set of solutions & expertise to address the impact and make the company ready for new Lease Accounting Standards ASC842 & IFRS16.

 

 


We Implemented Nakisa SLAN Enabled control of lease contracts with multi-layered approval process Integration with Native Finance System which is Secure, Scalable & Flexible. This enabled lease accounting compliance & streamlined lease administration processes for global lease portfolios.

CS Retail

Since the new leasing standards-setting process began, Bramasol has been at the forefront of addressing critical issues to help our customers get ready for both IFRS 16 and ASC 842. We have developed the Rapid Leasing Compliance Solution which further distills these overall efforts in a targeted turnkey solution, designed to help companies with straightforward leasing portfolios to cut through the complexity of the new standards and achieve compliance without excessive hassles or expense.

This turnkey offering is designed for companies with up to 300 leases and includes;
- 5 Basic Scenarios for Real Estate, Movables, or both
- Set-up of Nakisa and/or RE/FX
- Standard data & document loading
- Security set-up
- Standard out-of-the-box disclosures and reports for ASC 842 or IFRS 16

Click here to Learn more about Rapid Leasing Compliance Solution

Request Demo

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Topics: ASC842, SAPLeaseAdmin, IFRS16, Leasing Solution

New eBook: Lease Admin Solutions Need Scalability, Enterprise Performance and Native Integration

Posted by Bramasol Leasing Administration Team on Tue, Oct 3, 2017 @ 10:45 AM

In 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.

In addition to presenting a new set of challenges that need to be addressed in the near term, the changes in lease accounting also offer an excellent opportunity for companies to make major improvements in their end-to-end lease management practices.

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.

As long-term innovation partners with SAP, Bramasol and Nakisa have brought together a comprehensive set of solutions and expertise to help companies assess and prepare for the new FASB and IASB leasing standards. These solutions unify disparate leasing data and provide enhanced visibility for companies to make informed decisions on their lease portfolios, assets and liabilities while conforming with the new requirements.

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This new eBook provides a closer look at the key issues of Scalability, Enterprise Performance and Native Integration that are critical factors for success in implementation of new lease administration processes that maximize compliance, efficiency and extensibility.

eBook Lease Admin Solutions Need Scalability Enterprise Performance and Native Integration

Click here to download the eBook on Lease Admin Scalability, Enterprise Performance and Native Integration.

 

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Topics: leasing, ASC842, IFRS16, Leasing Solution

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