In this webinar, Dan Edwards, CPA and Luis Lopez, CPA from Crowe discuss how companies can implement new lease accounting standards with Microsoft Dynamics 365 and Microsoft Dynamics AX.
The International Accounting Standard Board and the Financial Accounting Standard Board in the U.S. have recently reviewed the current lease accounting standards in an attempt to resolve some of the larger issues that exist today in regard to corporate transparency.
Currently, the standards are creating inconsistencies in the way that companies report debt and income on balance sheets. This can create problems for analysts who review these balance sheets, as they are getting an unclear picture of how much debt and income the company is actually working with.
This issue is applicable across every industry. Any company can enter into a lease agreement, so the forthcoming lease accounting standard changes will impact almost all companies.
The two new leasing standards are known as IFRS 16 and ASC 842.
IFRS 16 essentially eliminates the operating lease and now all leases must be reflected as a capital lease, meaning they have to go on the balance sheet. Small dollar amount leases and short-term leases are exceptions to this new rule, but in general, all lease expenses will now be required to be tracked on the balance sheet.
Under the US standard, or ASC 842, operating leases still exist. However, operating leases will now be placed on the balance sheet with a right-of-use asset and a lease liability. The operating lease expense will still be a single operating cost, so there's no income statement change under the Generally Accepted Accounting Principles.
Microsoft has been working closely with professionals, including CPAs, who have years of experience in accounting to redesign specific functions and features of their software. Luis Lopez provides a demo of Microsoft Dynamics 365 to showcase exactly how it allows users to create, modify, share, and create reports surrounding leases in accordance with the new standards. An easy to use dashboard keeps tools and resources at the forefront, allowing for tasks to be completed quickly and with information readily available.
Contact Crowe today to learn more about how the Crowe Lease Accounting Optimizer can help your company implement the new lease accounting standards.