ASC 842/Lease Accounting Implementation

To start, we’ll hold a kick-off meeting with all relevant stakeholders to define and discuss the project scope, milestones, timeline, and definition of success.

After identifying the lease population, we’ll conduct current information and lease accounting process analyses. We’ll also identify technical accounting gaps and fill out an issues log, followed by performing a disclosure gap analysis to meet ASC 842’s extensive new disclosure requirements.

Data gathering often presents a significant challenge…but we make it easy. Our team handles everything from reviewing lease contracts, to extracting the information necessary for calculations, to selecting the proper discount rate (either a risk-free rate as permitted for private companies or an incremental borrowing rate if the company is considering going public in the future). From there, we’ll begin the calculation of amortization schedules and journal entries.

Next, we’ll replace error-prone Excel with a specialized lease accounting application or module. (Many of these modules only require the entry of inputs in the pre-determined fields after the transition methodology and lease classification are determined, enabling the rest to be automatically executed — computations, journal entries at transition and recurring monthly, and lease footnote disclosure.)

Which automated solution is right for you? Our team will help you select the appropriate technology platform and specific software package based on company size, demand for scalability and future growth, implementation and maintenance costs, and ease of use.

It’s now time to execute, considering the perspective and informational needs of all stakeholders (including sponsors, the board and management, creditors/lenders, and business units) as well as reporting and budgeting.

Between delivering the ASC 842 transition accounting memorandum, a new formalized lease accounting policy, a new lease checklist, recommended accounting processes (improved based upon best practices), and a lease workbook containing the amortization schedules and monthly journal entries for each operating and finance lease, we’ll set you up for post-implementation success.