The Federal Accounting Standards Board (FASB) has finally implemented the long expected – but long delayed – updated accounting rules for leases. The new FASB accounting standards for leases have created even more complexity for both landlords and tenants by expanding reporting requirements. They also have a potentially significant impact on the way you report lease income and lease expenses on your financial statements.

The good news is that Gray, Gray & Gray has decades of experience in managing and complying with accounting and reporting of leases. The new rules pose no problem for us. In fact, we have already taken important steps to help our clients comply effectively and efficiently.

What Has Changed?

The main change – the one that has everyone concerned –  is that all operating leases must be put onto the balance sheet of the company.  In essence, this means taking the net present value of the lease payments and recording a right of use (ROU) asset and a corresponding liability. These balances should be reduced each year as payments are made.

While this does not sound overly complicated, the entries required to be made each year will be complex. Plus, there are many additional disclosures that need to be calculated. 

How We’re Solving the Challenge

To assist our clients with meeting the new lease accounting standards, Gray, Gray & Gray has partnered with LeaseJava, a software platform that simplifies the new reporting process. This cloud-based software program removes the burden of tracking all the calculations and disclosures necessitated by the new accounting standards by producing the detailed amortization schedules and journal entries that are required. It calculates the initial transition entries, the monthly journal entries and all the disclosures.  Plus, the software can aggregate all the leases for a company and produce reports by company of the journal entries and disclosures.  And because it’s cloud-based you can access it from virtually anywhere, at any time!

We are offering clients the LeaseJava software at an annual cost of $100 per lease, depending on the number of leases.  We can provide you with access to enter the lease information on your own or we can enter it into the system for you.

Act Now!

With the busy year-end right around the corner, now is the time to get this done. Whether you want to continue to manage lease accounting reporting yourself, choose to take advantage of the LeaseJava program, or prefer to have Gray, Gray & Gray assist with the process, we encourage you to take action right away! Don’t wait until year-end to address these new standards. Doing so will simply pile on more work at a period when you have the least amount of time to deal with it.

For more information about how we can help you comply with the new lease accounting standards by streamlining the reporting process, contact us at (781) 407-0300.

You can also access the LeaseJava Quick Reference Guide here.