EZLease’s Post

Under ASC 842, companies are required to capitalize most leases on a balance sheet and report them as right of use assets and lease liabilities. Classifying leases does NOT have to be complicated. Download this handbook to see how easy it is with a lease classification tool → https://bit.ly/3d9dfxI #leaseaccounting #accounting #finance #asc842 #fasb

Under ASC 842, companies are required to capitalize most leases on a balance sheet and report them as right of use assets and lease liabilities. Classifying leases does NOT have to be complicated. Download this handbook to see how easy it is with a lease classification tool: https://bit.ly/3d9dfxI #leaseaccounting #accounting #finance #asc842 #fasb

IFRS 16 Leases requires lessees to recognize an asset (Right of Use Asset) and a liability (Lease Liability) for all leases unless they are short-term or of a minimal value. For Example, if company A leases a Truck for one year with the option to extend for further years without the option of purchase at the end of the lease from company B. The lease liability will be reflected in the lessee’s financial position statements (discounted at present value). What would you think about how this presentation will meet: 1-      The definition criteria of Liability in the conceptual framework: “A present obligation of the entity to transfer an economic resource as a result of a past event.” 2-     The definition criteria of financial instruments according to IFRS 9, Financial Instruments: “ A financial instrument is a contract that gives rise to the financial asset of one entity and gives rise to the financial liability or equity instruments of another entity.” As the lessor is not recording the leased receivables for the same periods.

Under ASC 842, it's helpful to understand the incremental borrowing rate of a lease in order to properly calculate and report lease liabilities. In this article, we outline the basics to make your reporting process easier. Read more → https://bit.ly/41rxBpm #ibr #leaseaccounting #accounting #financialreporting #asc842

Properly accounting for leases was not a one-time adoption exercise and will need to be part of regular accounting considerations for an ongoing basis. Get a quick refresher on guidance in #FASB’s ASC 842 on contract modifications/reassessments and impairment in this article from FORVIS.

Understanding lease categorization is vital for ASC 842 compliance, impacting how leases are presented in financial statements. This guide simplifies the process by outlining the two main lease classifications: operating and finance leases. It also emphasizes the essential factors for categorization and the respective accounting treatment for each classification. Ensure accurate financial reporting and confidently navigate the complexities of ASC 842. Learn more: ➡️ https://buff.ly/3PdfsZ5 #LeaseAccounting #FinancialReporting #operatinglease #financelease

Decoding Accounting for Leases! 📚💼 Leases are a common part of business operations, and understanding how to account for them is crucial. 1. Lease Classification: Leases are classified as either operating leases or finance leases based on criteria such as ownership transfer, bargain purchase options, and lease term compared to the asset's economic life. 2. Recognition on Balance Sheet: Under ASC 842 (or IFRS 16), lessees typically recognize assets and liabilities for most leases, bringing them onto the balance sheet. 3. Lease Liability: The lease liability represents the present value of future lease payments discounted at the lease's implicit rate or the lessee's incremental borrowing rate. 4. Right-of-Use Asset: Corresponding to the lease liability, the right-of-use asset reflects the lessee's right to use the leased asset during the lease term. 5. Amortization and Interest Expense: The right-of-use asset is amortized over the lease term, and interest expense is recognized on the outstanding lease liability, impacting the income statement. 6. Disclosure Requirements: Financial statements must disclose lease-related information, including lease terms, future lease payments, significant judgments, and uncertainties related to lease contracts. These points encapsulate the core aspects of accounting for leases, ensuring transparency and accuracy in financial reporting. #leaseaccounting #financialreporting #ASC842 #IFRS16 #mindspaceoutsourcing

Managing a quickly growing lease portfolio can become overwhelming when manual processes can't cut it anymore. This was the challenge WaveConn faced as their business expanded. Their lease agreements were complex, and the risk of errors was growing, putting their IFRS 16 compliance at risk. They needed a solution that could manage this complexity and ensure accuracy and efficiency. That’s where LOIS by Quadrent stepped in. By automating their lease management process, LOIS helped WaveConn dramatically reduce the time and effort required for IFRS 16 compliance. The result? A more streamlined operation, fewer errors, and the assurance that their financial reporting was both accurate and compliant. Read the full case study to learn more about how LOIS transformed WaveConn’s lease management: https://lnkd.in/gK49NGpg Facing similar challenges? How can LOIS help your business?

IFRS 16 Leases requires lessees to recognize an asset (Right of Use Asset) and a liability (Lease Liability) for all leases unless they are short-term or of a minimal value. For Example, if company A leases a Truck for one year with the option to extend for further years without the option of purchase at the end of the lease from company B. This truck (Asset) will be reflected in both companies' financial position statements (although at different values). This reflection will be the duplication of assets. What do you think about how this presentation will meet the fundamental characteristics of useful financial information in the conceptual framework: 1-   Relevant 2-   A faithful representation of an entity’s transactions.

Decoding Accounting for Leases! 📚💼 Leases are a common part of business operations, and understanding how to account for them is crucial. 1. Lease Classification: Leases are classified as either operating leases or finance leases based on criteria such as ownership transfer, bargain purchase options, and lease term compared to the asset's economic life. 2. Recognition on Balance Sheet: Under ASC 842 (or IFRS 16), lessees typically recognize assets and liabilities for most leases, bringing them onto the balance sheet. 3. Lease Liability: The lease liability represents the present value of future lease payments discounted at the lease's implicit rate or the lessee's incremental borrowing rate. 4. Right-of-Use Asset: Corresponding to the lease liability, the right-of-use asset reflects the lessee's right to use the leased asset during the lease term. 5. Amortization and Interest Expense: The right-of-use asset is amortized over the lease term, and interest expense is recognized on the outstanding lease liability, impacting the income statement. 6. Disclosure Requirements: Financial statements must disclose lease-related information, including lease terms, future lease payments, significant judgments, and uncertainties related to lease contracts. These points encapsulate the core aspects of accounting for leases, ensuring transparency and accuracy in financial reporting. #leaseaccounting #financialreporting #ASC842 #IFRS16 #mindspaceoutsourcing