Let’s review the six major enhancements for advanced lease accounting…
- 1. Period end close capabilities. TRIRIGA 10.5.3 delivers “Advanced Lease Accounting Period Close” which ensures that no additional journal entries can be posted for that closed period…
- 2. Enhanced segregation of duties. With IBM TRIRIGA 10.5.3, the roles and responsibilities of Lease Accountant and Lease Administrator have been clearly delineated…
- 3. Streamlined modification processing. A revised process for recording lease modifications has been introduced in this version which supports FASB/IFRS compliance and creates a single process flow for all modifications…
- 4. Disclosure requirements templates (quantitative metrics). IBM TRIRIGA 10.5.3 comes pre-loaded with a variety of OOB report templates which support FASB/IASB lease accounting compliance…
- 5. Journal Entry Configuration Framework. With capabilities to generate Journal Entries for ASC 840 and ASC 842 under US-GAAP, as well as for IAS 17 and IFRS 16, IBM TRIRIGA 10.5.3 practically transforms the Real Estate Manager module into a sub-ledger system for Real Estate and Asset Lease Accounting…
- 6. Simplified ERP Integration (Data Transfer Object). IBM TRIRIGA 10.5.3 simplifies the process of transferring the lease accounting data into your ERP system by creating a Data Transfer Object (DTO) file that loads into the ERP General Ledger…
[Admin: To see other related posts, use the ValuD tag.]
This wiki lists our lease accounting videos. The IBM TRIRIGA Lease Accounting team presents the key features and enhancements of our lease accounting tools from 10.5.0 through 10.5.3.1, including partial payments, FASB/IASB setup, ASC 840/842, GAAP/IFRS leases, and index adjustments.
[Admin: This post is related to the 02.22.16 post and 09.29.14 post about finding information on TRIRIGA lease accounting. To see other related posts, use the Leases tag or Accounting tag.]
Are you getting ready to address the implications of the new lease accounting changes with TRIRIGA? Although FASB’s ASC 842 and IASB’s IFRS 16 will take effect in 2019, many organizations are only now beginning to realize the amount of effort required to meet the new standards…
The biggest changes to businesses will be the new Right of Use (ROU) Assets and Lease Liabilities that will hit balance sheets, as well as the intensely manual approaches and effort that many see before them. How many organizations are leveraging Integrated Workplace Management Systems (IWMS) to manage their real-estate holdings and automate these manual efforts?…
In order to help organizations comply with the new standards, and understand the implications of these changes, TRIRIGA continues to deliver a single integrated workplace management system with new enhancements in the next release. TRIRIGA supports the lifecycle of facilities management and will automate compliance activities to address changes that affect multiple teams and roles.
Here’s how TRIRIGA can help:
- CFO and CAO: The release of IBM TRIRIGA 10.5.3 will provide a sub-ledger system for real estate and asset lease accounting that is able to generate journal entries out-of-the-box for ASC 840 and ASC 842 under US-GAAP as well as for IAS 17 and IFRS 16. It also covers period closings and report generation for the most common reports required under the new standards.
- Real Estate and Fixed Asset Managers: The release of IBM TRIRIGA 10.5.3 separates the duties of a lease administrator and a lease accountant, allowing the lease administrator to enter contractual information, and then enabling the lease accountant to run classification tests, reassess lease decisions, and report on the ROU Asset and Lease Liability.
- Facility Management, and Occupants: There are also new capabilities to improve day-to-day and occupancy experience. They can leverage a new Workplace Services offering that engages everyday employees through new mobile web apps that provide access to services managed by IBM TRIRIGA, anywhere, and on any device. This includes: a new Service Request app to submit work requests, a new Reservation app to quickly create reservations for individual workspaces or multi-attendee meeting rooms, and a new location-aware Workplace Services Portal to provide a single, unified access point for launching the apps and tracking status of requests…
[Admin: To see other related posts, use the FASB tag or IFRS tag.]
For TRIRIGA 10.5.2/3.5.2 OOB, there is an issue with the “Initial Liability Carryover” (ILC) field. In both operating leases and capital leases, when a value is entered in this field, the right of use (ROU) asset in the future accounting schedules is not reduced at Day 1 (against lease liability (LL) and initial direct costs (IDC)).
- What should happen: Day 1 ROU = Day 1 LL + IDC – Initial Liability Carryover.
- What is happening now: Day 1 ROU = Day 1 LL + IDC. (No ILC is applied.)
The balance in this ILC field should get pulled into the Day 1 ROU asset balance, and it currently does not. If this field is functioning per OOB, then we need to fix it. It is critical that the transition to the new accounting standards is calculated correctly.
The initial carryover balance (ICB) was not applied to new accounting schedules. Moving forward, if leases are created on or after the look-back period, the initial carryover balance will now be applied to operating leases and finance/capital leases.
[Admin: A similar article is also posted in the IBM TRIRIGA blog. This post is related to the 07.27.16 post by ValuD about handling GAAP and IFRS in TRIRIGA leases. To see other related posts, use the ROU tag.]
We have a number of existing enterprise TRIRIGA customers who are retaining their lease data in TRIRIGA (their investment), but using a connected, low-cost, cloud-based solution for lease accounting. The good news is that it works, it’s easy, it’s lower cost, and in production today with Fortune 100 customers with large TRIRIGA investments. Let me know if you have an interest in moving into a lease accounting solution in a low-cost way, while preserving your TRIRIGA investment.
CoStar Lease Accounting Setup for ASC 842 and IFRS 16 Compliance
- 1. Connect existing lease management systems with our proprietary Data Connector. You can retain investments in existing lease systems and take advantage of our proven lease accounting functionality while avoiding the costs of upgrading enterprise software.
- 2. Migrate all existing lease data with our integrated Lease Administration System. You can upgrade existing systems to the smart choice for lease accounting and management, provide access to an unlimited amount of organizational users and departments, and save on long-term costs associated with multiple systems and upgrades.
[Admin: To see other related posts, use the FASB tag or IFRS tag.]
It has now been well over a year since both the FASB and IFRS have finalized their guidance on the future of lease accounting which is effective beginning in 2019 for publicly traded companies. The tasks to move a company’s leases onto their balance sheet can be overwhelming, considering all the necessary steps to reach this goal. Fortunately, the lease classifications have not drastically changed.
US FASB (ASC) Topic 842
The US FASB (ASC) Topic 842 will continue to allow for lease classification as either “Operating” or “Finance” (previously considered “Capital” leases under Topic 840). However, a fifth criteria was added to the existing four possible criteria that could render a “Finance” classification. In addition, the prior bright lines from Topic 840 no longer exists. The new standard will require more judgement, but also allow more flexibility in the classification decision.
If any one of the five following criteria are met, a lease is considered a “Finance” lease. If none are met, the lease is considered an “Operating” lease:
- Ownership of the underlying asset transfers to the lessee by the end of the lease term.
- The lease continues a purchase option, which the lessee is reasonably certain to exercise.
- The lease term is for a major part of the remaining economic life of the underlying asset.
- The present value of the lease payments and any residual value guaranteed by the lessee is greater than or equal to substantially all the fair value of the asset.
- The asset is of such a specialized nature that it will not have an alternative use for the lessor at the end of the lease term…
No matter which lease classification is determined, both types of leases will require a right of use (ROU) asset and a corresponding lease liability (LL) to be calculated and presented on the balance sheet…
One of the major differences between US FASB Topic 842 and IFRS 16 is the classification of all leases under IFRS 16 as “Finance” leases. A lease classification test will not be the determining factor of whether a lease will be presented on the balance sheet. Instead, any lease contained in a contract must be reflected on the balance sheet as a financing arrangement…
[Admin: To see other related posts, use the FASB tag, IFRS tag, or ROU tag.]
From 1 January 2019, the new lease accounting regulations from the Financial Accounting Standards Board (FASB) and the International Accounting Standard Board (IASB) will need to be implemented in order to comply with the new standards, ASC 842 and IFRS 16 respectively. In this blog, I will share with you the important lease accounting changes and relevant terminology.
With effect from 1 January 2019, publicly listed companies will be required to include on their balance sheets all leasing contracts with a contract term longer than one year. This is a measure against an offensive strategy of sell-and-lease-back, also known as off-balance financing. It implies that organisations can free up financing, as leased properties – in contrast to owned properties – are not required to be included on the balance sheet. This strategy was used by many corporates during the 1990s and early 2000s. The key objective of the new standards are to enhance financial transparency in lease accounting administration…
The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB)… are convinced that actual lease liabilities should be reflected in a uniform way for readers of financial statements. Since 2006, FASB and IASB have been undertaking a review of their relevant lease-related chapters ASC 840 and IAS17 that cover lease accounting. By moving away from current accounting practice, financial transparency will be enhanced by showing off-balance lease financing, together with the related liabilities, on the balance sheet.
From 2019, the relevant compliance standards are ASC 842 (which replaces ASC 840) and IFRS 16 (which replaces IAS17). However, even though the new reporting requirements take effect from 2019, at that same time, organisations must comply retrospectively to ASC 842 and IFRS 16 for the years 2017 onwards. Therefore, it’s time to act now, as 2019 is fast approaching! In my next blog, I will elaborate on the steps that a Corporate Real Estate manager will have to take, working together with their CFO, in order to be ready in time for the new lease accounting regulations.
[Admin: This post is related to the 04.26.17 post by Planon about 3 steps to take to meet the 2019 deadline. To see other related posts, use the Planon tag.]