It’s officially time for companies to transition to ASC 842. The adoption of the new standard can be a daunting task for many and certainly comes with challenges. As with any new standard, there is a significant gray area that must be navigated to understand how to account for your leases correctly. This is where NetLease comes in.
NetLease uses AI-powered lease abstraction to simplify the process. Plus, our team of lease accounting experts can provide you with the information you need to apply the new standard correctly. This certainly applies to the most critical step in the adoption process, lease abstraction.
Key Takeaways:
- Transitioning to ASC 842 requires a nuanced understanding of the new regulation in order to be able to account for your leases correctly.
- NetLease team of lease accounting experts have reviewed hundreds of leases and work with auditors regularly, meaning they can provide you with the information you need to apply the new standard correctly.
- NetLease will make your transition to accounting under ASC 842 as painless as possible with AI-powered lease abstraction.
Understanding the Complexities of ASC 842 – the First Step in Compliance
Under ASC 842, companies need to take a close look at their existing leases to gain a thorough understanding of the contents of each lease. There are several areas that can be confusing when deciding what terms matter under the new guidance and how it will impact the accounting treatment of your leases.
For example, how do you account for lease incentives that are contained within a lease? Not only do you have to decide how to account for these leases if they exist, but you also must be able to identify what constitutes a lease incentive and when it will occur during the lease term. This involves understanding who owns the leasehold improvements, as well as the nature of the improvement itself.
ASC 842 requires a nuanced understanding to determine what agreements fall into the scope of the new standard. While some leases are straight-forward, many require a thorough understanding of what constitutes lease components, non-lease components, and non-components to determine what information needs to be abstracted.
In addition to identifying all these separate components, another challenge is understanding how each component will affect the accounting treatment of your leases. For example, how will delivery fees or documentation fees affect your Right of Use Asset and Lease Liability? How will extension or purchase options affect the treatment of month-to-month leases?
By using the NetLease team to abstract your leases, you can put these worries behind you. Our team has the expertise needed to address these questions in a timely manner and ensure that all components necessary to building your lease schedule are included
How NetLease Can Help Make the Lease Accounting Process Faster and Smoother
The NetLease team is comprised of lease accounting experts that have reviewed hundreds of leases. We work with auditors regularly, which provides us with the necessary insight into how to make you audit-ready. Our goal is to make your transition to accounting under ASC 842 as painless as possible by consulting with you about how the guidance should be applied to your leases. NetLease uses Netgain’s AI-powered lease abstraction process and automated accounting software to take any private company’s lease portfolio and get you into compliance fast. Whether you report annually, quarterly or monthly, we’ve got you covered.
Our Services Include:
- Lease review, abstraction and loading of key data into your dedicated NetLease account – your adoption is managed by lease accounting experts with ASC 842 in mind
- Compliance with ASC 842
- ASC 842 adoption memo and template footnote disclosure language
- Audit support for ASC 842 adoption
Bottom Line
We are here to save you time and energy through the transition process. If you have a large portfolio of leases or simply have never thought about lease accounting, our team has the expertise needed to transition you to ASC 842 in a timely manner.
