fusion, the apps people Lease Accounting provides full lease management for Lessees.
Lease automation routines provide all the calculations required for compliance with IFRS 16 and other relevant accounting standards.
As of January 2019, the global standard for lease accounting changed.
IFRS 16 is a regulation created by the IASB (International Accounting
Standard Board) that requires the use of a single lessee accounting model.
The new standard makes it necessary for publicly listed companies to
include all leasing contracts with a term longer than 12 months on their
balance sheets. This ensures a lessee recognises their assets and liabilities
for all leases that are contracted to last over a year.
Due to the complexity and importance of complying with the new standards,
using IFRS 16 Lease Accounting Software is necessary to ensure all regulations
are met and reported in the most efficient way possible.
fusion, the apps people can deliver IFRS 16 Lease Accounting Software that is compliant
with all the necessary regulations, ensuring your business can comply to
industry standards.
LEASE ACCOUNTING MANAGEMENT IFRS 16
Why use fusion the apps people Lease Accounting?
- Full life cycle of a lease automated for lessors
- Automatic calculation of monthly schedule and GL postings
- Complies with IFRS 16 ASC842 accounting standards
- ROU asset details automatically maintained
- Intuitive Excel upload and download facilities
- Full mid-term adjustment facilities
Some core competencies:
Calculating Right of Use Asset
• The new lease accounting standard IFRS16 has brought changes in
operating lease charges accounting. Under IFRS 16 the operating lease
charges are replaced with a depreciation charge for leased assets and
an interest expense on leased liabilities.
• The solution calculates the initial measurement of the right-of-use
asset, which consists of:
o Lease liability
o Lease payments made on or before the commencement date of the lease
o Any initial direct cost incurred by the lessee
• Subsequent measurement of the right-of-use asset includes:
o Depreciation
o Any changes in lease liability
o Asset impairment provision.
Accounting for Right-of-Use Asset
Recognition of the RoU Asset: Right of Use Asset is depreciated over the lease term or over the useful life of the underlying asset.
Lease Status Management
In addition to major lease statuses the solution provides the ability to track leases by more detailed statuses – requested, quoted, signed or withdrawn, activated, extended, early-terminated, buy-out and expired.
Statement of Financial Position and Reporting
In the Statement of financial position, you must present right-of-use assets, per asset category (separately from other assets) and lease liabilities, separately from other liabilities. These are readily available as an excel report and/or data file of G/L transactions for uploading to other systems.
- Profit and Loss Reporting: In the profit and loss statement, you must present the interest expense on lease liability and the depreciation charge for the right-of-use asset. The non-lease component included in lease payments goes separately to operating expenses. All this is readily available from Lease Accounting Management for reporting or uploading to other general ledger systems you may use.
- In the cash flow statement, it is required to present separate cash payments for the principal portion of the lease liability and interest portion. The solution provides the required breakdown of cash flows, handling payments for low-value and short-term leases, which are included in cash flows from operating activities.