Finance lease accounting under the new FASB standards
Accounting for finance leases (also known as capital leases) will not change substantially under the new FASB lease accounting standard. In your finance lease accounting, you will continue to include a right-of-use asset and a lease liability on the balance sheet, initially recorded at the present value of all lease payments.
However, there are changes to the criteria you must use to determine if an agreement is a finance lease or an operating lease. For example, you’ll need to know if your organization is reasonably certain to exercise purchase options, and whether specialized assets will have any alternative use to the lessor at the end of the lease.
It’s more important than ever to understand how to classify leases and implement the correct accounting treatment for all your leases. As you make the transition to the new lease accounting standards, you’ll be under close scrutiny from auditors and investors and the consequences of getting it wrong will be costly. It’s essential to choose lease accounting software that’s ready to handle all the nuances of the new standards. That’s why you can trust Visual Lease.
Simple & accurate finance lease accounting with Visual Lease
Automate your finance lease accounting for all types of leased assets, including property, equipment and vehicles, with our FASB and IFRS compliant solution.
- Easily classify every lease as you enter the data with our built-in classification test for finance and operating leases.
- Meet your compliance deadline by quickly importing lease data using data migration templates.
- Calculate and record the initial right of use assets for every lease.
- Calculate monthly and annual expenses related to each asset.
- Calculate payments and create entries for specialized lease types, including percentage rent, lessor/sublease, and sale-leaseback.
- Send journal entries and disclosures to your GL/ERP system (and to multiple GLs).
- Record multiple entries for each lease in accordance with both the current and new standards for reporting during your transition period.
- For determining Present Value of assets, configure the discount rate that works best for your business.