Lease Accounting: Are You Ready?
New Lease standard is effective for public companies for annual periods beginning after December 15, 2018. Under the new standard, lessees will have to account for operating leases conceptually similar to how capital (now called finance) leases are accounted for. In other words, lessees will have to record the right-of-use asset and lease liability at the amount of discounted future lease payments.
Generally, accounting for finance lessees is more involved than for operating leases. Given that most leases will be accounted for similar to finance leases, it will require more time and effort. Accounting even reasonable amount of finance leases in excel can be challenging. Companies should considered appropriate software tools that will automate the process.
FinAcco developed the questionnaire used to evaluate different lease software products.
As usual, we made complex accounting issues simple.