Why lease accounting is hard, and how to simplify it

Let’s face it, lease accounting is hard. ASC 842 fundamentally changes how finance teams account for their lease liabilities and ROU assets. Your journal entries and close-the-books processes need a sustainable process in place. Part of the intent of the standard was to shed more light on “off-balance sheet” financing - which is why operating leases will be reported on balance sheets going forward in the form of those ROU assets and liabilities.
Lauren Bahr, VP of Finance and CPA at Occupier led this webinar discussion, originally aired on MyCPE.
Lease Accounting by Occupier: www.occupier.c...
Occupier's Resource Hub: www.occupier.c...
ABOUT OCCUPIER
Occupier is a single-source-of-truth platform that enables collaboration across the entire deal life cycle - from transaction management to lease administration and lease accounting. The Occupier Team combines their deep experience in the commercial real estate (JLL) and proptech industries (VTS, ProCore, WeWork), and applies it to the world of the occupier.
Learn more about Occupier: www.occupier.com/
Schedule a demo: www.occupier.c...

[@evandromedeiros5352]

This is gold. Thank you.

[@occupier]

Glad you found this helpful, Evandro! If you are in need of additional lease accounting content, check out our ASC 842 resource hub: www.occupier.com/lease-accounting-compliance-hub/

[@biboguitar]

Why does initial direct cost has a plus sign? Isn’t that landlord paying to broker? How is that adding to the rent, which is lease liability?

[@occupier]

Hi Paul - Great question.
An initial direct cost is an outlay from the lessee for any cost that is direct and incremental to signing a lease agreement. So it would not qualify in the event that a landlord (or lessor) paid the real estate broker. An initial direct cost does not impact the lease liability but rather the right of use asset as it is considered a cost to secure the lease for the lessee.