Lease Accounting
CFGI Can Help You Navigate the Challenges of a Post-Adoption World
Although most companies have successfully transitioned to the new leasing standard (ASC 842), many continue to find it challenging to proactively manage their lease portfolios and ensure continued compliance with financial reporting requirements. These challenges are heightened in the current economic environment, when many companies are actively managing their real estate footprint to respond to evolving workplace trends, such as remote work.
Finance teams also may find it challenging to stay up to date on current lease accounting trends. Lessees and Lessors continue to modify the structure of leasing transactions to adapt to changes in the current economic environment, which can result in accounting and tax implications. Regulators, standard setters and accounting firms are constantly updating their interpretive guidance to address these new accounting complexities.
CFGI’s leasing experts have helped hundreds of clients navigate the accounting and operational challenges associated with leasing activity.
We empower management teams to identify and proactively address potential lease accounting challenges to ensure that leasing activity is reported timely and correctly.
- Determine whether an arrangement is a lease or contains an embedded lease, from both a lessee and lessor perspective
- Determine the accounting owner of leasehold improvements
- Appropriately account for lease modifications, terminations and amendments
- Identify and analyze impairment triggers for right-of-use lease assets and asset groupings
- Determine the appropriate accounting for master lease agreements and “TRAC” leases (i.e., leases with a Terminal Rent Adjustment Clause)
- Analyze the appropriate accounting for new real estate leases involving construction
- Identify and account for sale-leaseback transactions
- Determine the accounting for leases acquired in business combinations and asset acquisitions under ASC 805
- Address lessor accounting complexities including interaction with ASC 606
Establish effective processes and controls to capture lease activity accurately and timely and minimize compliance costs, including:
- Ensuring that new and/or modified leases are executed in the correct period
- Identifying reassessment triggers requiring lease remeasurement
- Capturing contracts that may be, or contain, a lease
Maintain a complete repository of leases, including embedded leases, and determine how best to manage that portfolio (e.g., maintain in Excel or migrate to a lease accounting software platform)
Streamline deployment of new lease accounting software to help companies achieve more extensive automation, time savings, and cost reduction, including assistance with data migration and ongoing platform maintenance
Provide valuation services to determine incremental borrowing rates or ascribe value to acquired leases in business combinations and asset acquisitions
CFGI Has Your Back
To learn more about how CFGI can support your organization’s leasing activities, contact our experts today.
Connect With Our Leaders
Michael Handley
Partner
(508) 446-5718
mhandley@cfgi.com
George Sarianos
Partner
(215) 558-2860
gsarianos@cfgi.com
Marc Villano
Managing Director
(908) 246-7391
mvillano@cfgi.com
