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  • WHAT IS LEASE ACCOUNTING SOFTWARE?

    Leasing provides a lot of attractive benefits to businesses. In addition to preserving cash flow for other expenditures and providing tax benefits, this approach makes it easy to upgrade equipment and stay on top of the latest advancements.

    To minimize turbulence in these cases, lease accounting needs to be a priority. Businesses must properly record and track their lease agreements to ensure they honor them and are able to effectively plan for the future.

    The Evolution of Lease Accounting Standards

    For many years, it was only capital leases for equipment that had to be included on company balance sheets. Corporate real estate leaders could obtain most of the necessary reporting details from lease abstracts.

    But with new lease accounting standards from the Financial Accounting Standards Board (FASB), both capital and operating leases have to be included on the company balance sheets. This requires greater accountability on the part of corporate real estate leaders and more data than a lease abstract is able to provide.

    Best Practices in Lease Accounting

    Before you can get your financial data in order, you need to know which lease accounting details to track. These go beyond the objective details you’ll find in your lease abstract.

    Analyze Intention Decisions

    A company’s finances and operations are bound to shift after a property or asset lease is signed. It might be best for you to end a lease before the agreement end date, or perhaps you’ll be in the market to purchase the property or asset. These decisions will ultimately impact the data you need to report on. By consulting your lease accounting partners, you can ensure you remain compliant with lease accounting standards.

    Review the Fair Market Value

    Based on current market conditions, the estimated value of property or an asset can vary. While there is a number attached to this, the constant change of market conditions makes it impossible to calculate in advance. Instead, corporate real estate leaders have to look at the value of comparable properties in the surrounding area with the same tenant types and determine a rate based on their assessment.

    Measure the Useful Life of an Asset

    As dictated by Generally Accepted Accounting Principles (GAAP), companies are required to report the full acquisition costs for fixed assets. What also needs to be accounted for, though, is how the value of an asset depreciates over time. This involves consulting the GAAP useful lives and salvage values tables for each asset. Through the combination of asset management software and lease accounting software, businesses can easily access these details and maintain compliance with new lease accounting standards.

    CHOOSING LEASE ACCOUNTING SOFTWARE

    When choosing a lease accounting software, research is an essential step. Taking the time do this will help you make the most out of your investment.

    Here are some tips to guide you through the process:

    • Collaborate with other departments to confirm if current software systems support lease accounting
    • Search for an integrated workplace management system (IWMS) that lets you pay a monthly fee for individual modules
    • Watch out for providers that charge high premiums for each lease
    • Instead of allowing lease accounting to dictate workplace management software, opt for data integrations between systems

    How Our Asset Management Software Helps You Comply With Lease Accounting Standards

    It’s no secret that assets are crucial to the office experience. But just as important as the assets themselves is the ability to effectively visualize and track their every detail—lease terms included.

    With iOFFICE’s asset management software, companies can easily store and monitor lease contracts for all assets throughout their lifecycle. A partnership with Visual Lease, a lease accounting management software provider, enables you to run lease reports as well as see data directly from our IWMS.

    What’s more is that, as your organization experiences growth, the solution evolves with you. New leases can be added into the system over time and customized reports can be created to account for your needs.

    request a Demo of our Asset Management software

    Don’t let the new lease accounting standards be a point of fear. With our asset management software and Visual Lease, you’ll have all the lease accounting details you need to keep your finances in order and maintain compliance.
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