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The capitalized lease method serves as an efficient method of accounting for leases. Fundamentally, the lease obligation of a corporation gets recorded as an asset under this method of accounting. This article talks about the capitalized lease method, discusses capitalized lease obligations, explains its workings, and uses an example to illustrate the concept.
In this article, we will go through the primary requirements and steps to be followed while accounting for operating leases and making journal entries precisely, in accordance with ASC 842.
The recent GASB 96 SBITA has been released keeping in mind the rapid digital revolution and enhanced usage of subscription-based information technology arrangements (SBITA). SBITA or subscription-based information technology arrangements can be understood as a contract allowing one party to use a vendor's information technology software alone or in combination with its tangible capital assets.
Accounting for capital leases refers to a method in which a company treats assets that it has leased from a lessor in accordance with a capital lease agreement. Here is a comprehensive guide that covers all aspects associated with capital leases, from accounting treatment to examples.
The term "lease accounting" is the process through which a business keeps track of the financial implications of the leasing endeavors. In this extensive guide on lease accounting, we discuss what it is, its implications, and the key differences between lease accounting under old vs. new standards.
A rental concession is a compromise a property owner makes to the terms of a lease agreement intended to entice tenants. This guide covers the meaning and prominent types of Rental Concessions, as well as its pros and cons.
A simple definition of an embedded lease would be a lease contained within a more extensive contract or agreement. This guide contains definition, identification and implication of embedded leases, along with its example and types of contracts typically included in it.
In a lease arrangement, the lender allows the lessee to use the asset for a fixed period in exchange for a specific period while still owning the legal ownership of the asset. Unlike leasing, the owner here acquires and buys the product/asset/service in exchange for money. In this article you will find key differences of Lease vs. Buy analysis, their pros and cons and factors to consider.
Amortizing a lease is the procedure of paying off a debt gradually through a series of payments scheduled at regular intervals. This article talks about the lease amortization schedule and how to handle its intricacies.
Under the rent abatement provision, a tenant is allowed to suspend all rent payments for a stipulated time or only pay a percentage of the rent. Learn more about rent abatement, it's types and terms in this guide.
Under the sales leaseback arrangement, a seller sells an asset to a buyer, who then agrees to lease back the asset to the original seller immediately. This guide covers the definition and types of sales leaseback, who can benefit from it and how does it work?
The GASB 87 mandates all leases with terms longer than a year to be represented as liabilities and right-of-use (ROU) assets, in an effort to make financial information more actionable. This extensive guide on GASB 87 covers all crucial aspects of this lease accounting standard.
Master the new lease accounting standard with our ultimate guide to ASC 842. Learn everything you need to know about compliance and implementation today.
A lease incentive is a supplemental benefit offered by a landowner to entice (or retain) a renter. Here's a guide that covers what lease incentives imply, the several types of lease incentives, and some examples to understand the concept better.
Tenant improvement allowance means funds granted to a tenant by a property owner to help with the renovations made to the office space. Here is a comprehensive guide that covers several facets of the Tenant Improvement Allowance (TIA), what it covers, how it's paid and negotiated, and much more.
This guide covers all crucial aspects of IFRS 16 in an attempt to break down lease accounting component and help weigh the benefits, drawbacks, and overall impact it will have on a company's books.
The new lease accounting standards provide greater clarity, transparency, and legal support to companies engaging in lease transactions. The new lease accounting standards apply to all private and public entities engaging in lease transactions. This article will give all the information needed to engage in lease contracts.
Notes payable are the long-term debts a business has collected with a promise to pay them back within the terms set in a legally binding document (like a promissory note). Accounts payable can be defined as the short-term payment liabilities that your business may have towards its associates, vendors, or suppliers.
Budget vs. actual variance is the method through which a business calculates the difference between its proposed budget and the monetary amount on hand. In this article, know what it is, what are its primary types, what causes it, and the steps to perform it.
Asset life cycle management is a method that takes an analytical and strategic methodology to the maintenance and administration of a company's assets. This article covers prominent aspects of asset life cycle management and why it holds immense importance for businesses.
An estoppel certificate refers to a letter or statement agreed upon by a tenant or landlord that a commercial lease agreement with all its stated clauses exists. Know what it is, how it works, and its different types.
A commercial real estate appraisal is the process of getting a commercial property evaluated by a professional appraiser for buying or selling purposes. Learn what it is, how it's done and what are its benefits.
The major difference between a lessor and a lessee is their position in a lease. While the lessor is the one that holds the rights to a property/asset, the lessee borrows the right of use of the property/asset for a certain period of time.
Lease accounting refers to the process used by companies to record the financial impact of their leases. In this article, learn what it is, how it is done, and who are the parties involved.
Leasing is the term used to describe a contractual agreement that allows companies to utilize and manage an asset without actually having to own it. Financing refers to an agreement in which a financial institution provides the client with the funds necessary to purchase an asset. In this article, know how they are different, their benefits, and which one is better.
In Right of Use, assets now capture specifics of how a lessee gets the authorization to utilize an asset if it's mentioned in a lease during a contract's duration. It does so in a way that makes it easy to understand. In this article, know what it is, how its value is determined, and how it's calculated.
Leasehold improvements can be defined as the changes or modifications done to a property to suit the tenant's requirements before signing the lease. In this article, know how it works, what are its different types, and how its accounting is done.
A finance lease is an agreement in which the lessor allows the lessee to use a particular asset for a fixed term. An operating lease is an agreement in which the lessee is allowed to use an asset with the permission of the lessor for a limited term.
Deferred rent occurs when a contract presents a tenant with free rent settlement for one or more than one rent term. In this article, know what it is, what a deferred expense is, and how it is different from prepaid expenses.
The incremental borrowing rate refers to the interest rate a lessee needs to pay to be able to fund an asset. In this article, know what it is, when to use it in your lease accounting, why you need it, and when you can update it.
A full-service gross lease (FSG) is an agreement where the property owner is responsible for maintenance, renovations, and other service charges of the property. In this article, know what it is, the terms related to it, and its advantages.
A capital lease affects your ledgers whereas an operating lease doesn't. In this article, we compare capital leases vs. operating leases, how they work, and what are the pros of using them.
Lease administration is a continual process of checking whether the lease's key business points and legal information are being adhered to. Learn why it's important, the tasks related to it, and effective ways to manage it.
The lease commencement date refers to the start or beginning date of the lease term. In this article, know the different types of commencement dates, why you should document the date, and how you can implement it.
Lease abstraction aims to simplify complex lease documentation. It is a summarized version of important lease terms, conditions, and relevant lease data derived from the original lease document. Learn what lease abstraction contains and why you need it.
A graduated lease is a type of lease agreement between the parties involved where they agree to an adjustment of monthly payments on a periodic basis. In this article, know what it is, how it works, and who can benefit from it.
Lease/contract management is the daily carrying out of tasks associated with a company's lease portfolio. In this article, get to know the features and functions of lease management software to ease your workflows.
A lease is simply a document that has the terms of an agreement between two parties. In this article, you'll know the benefits of a lease management software and how it can simplify your business.