If you are frantically scrambling around trying to figure out if you are going to be in compliance with the FASB’s new ASC 842 standard by January 1, 2022, you are in good company. This new standard went into place for public companies in 2019, and as restated by FASB a few weeks back, will officially be going live for private companies on January 1, 2022. Fortunately for you, we have been working on lease accounting under the new standard for over three years, and we have you covered. Based on my experience with countless clients, below are some of the most common questions I am getting about our lease accounting software, NetLease.
Q: What if I have escalating rent payments?
A: Most real estate leases end up having some sort of escalations to their lease payments, and our solution easily allows for clients to input this information while creating the lease. We then are able to see the escalations on the amortization schedule that is automatically built for us during the process.
Q: Can I allocate my expense?
A: Yes, we can easily allocate your expenses to their proper accounts. We can do this by utilizing current vendor bills in NetSuite, or we can manually create a vendor bill with this information from the NetLease solution.
Q: Does the tool handle rent concessions?
A: Yes, the tool does allow for rent concessions, as well as other modification types. We conveniently have a ‘Modify Lease’ button on the lease homepage that quickly and easily updates the lease record. You simply input the changes made to the original contract and the system, in turn, creates an updated amortization schedule and modification journal entry.
>Q: Does NetLease have the reports I will need for the audit?
A: Yes, NetLease has very robust reporting that includes the disclosures you will need for your audit. Outside of this, we have other reports including roll forward and waterfall reports. All of these reports can be easily adjusted with various filters and exported directly to excel.
Q: Does your solution have multibook capabilities?
A: Yes, this capability in NetLease allows for reporting in both IFRS and USGAAP without either being affected.
Q: Can I input my lease midlife?
A: Not only can you input your lease midlife, but you can create an amortization schedule with all historical data of the lease. This allows you to keep all pertinent information and still begin booking journal entries at the proper go live date in the system.
Q: Is there any help on determining how my lease should be classified?
A: Yes. We have a lease proposal where you input the lease information and answer a few short questions about the lease. Once this is done, you are shown the lease classification for the individual lease.
Q: Is there a limit to how many users I can have on the solution?
A: No. You can have an unlimited number of users on NetLease and you can assign the users different roles.
Bottom Line:
Lease accounting can be stressful. Especially when you are just getting started on a new standard. Our goal at Netgain is to make this transition as easy as possible, and our NetLease product was created with that in mind. If you are looking to automate your lease accounting and mitigate any risk, please reach out.
