The Financial Accounting Standards Board released the accounting standards update No. 2016-02 (Topic 842) in February 2016. According to FASB, the update increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet. Leases are classified as either Type A (finance) or Type B (operating). Both classifications will recognize a Right-Of-Use asset and liability on the balance sheet at the commencement date of the lease. Finance leases will be accounted for using the interest and amortization method. Operating leases will use the single lease expense accounting method.
Most leases fall under the Type B - operating classification, this tool focuses on producing the ROU asset and liability schedules to meet the accounting needs of an operating lease: a single lease expense entry for the asset and a remaining balance entry for the liability. This tool can be used to create or convert a single lease to adhere to the FASB topic 842 guidelines. If you would like to account for and maintain a portfolio of leases please contact [email protected]
For a detailed lease accounting guide to FASB topic 842 with a breakdown of each ROU asset, liability, and amortization column in this tool please email [email protected]. You can review the FASB accounting standard by clicking here.
As always you should check these schedules with your accountant. By using this software you agree that you are responsible for your use of the output the software will generate for you. Please check the box if you agree to these terms and choose if you would like to view an example lease or enter your own data.
Section Two - Lease Costs to Capitalize
Section Three - Lease Considerations