What's New in ARCHIBUS V.24.1?

ARCHIBUS Extension for Lease Accounting


V.24.1 introduces the ARCHIBUS Extension for Lease Accounting. This Extensions supports the new guidance for financial reporting defined by financial accounting standards bodies.

Both the Financial Accounting Standards Board (FASB) in the United States and the International Accounting Standards Board (IASB) have issued new guidance concerning how to account for leases. The key driver for the change is transparency of reporting, as the change requires organizations to account for all debt on the balance sheet in a consistent and systematic way.

Under previous guidance, companies could expense the costs for operating leases and document the presence of leases as a footnote in annual reports. Under the new guidance, organizations must record assets and liabilities on the balance sheet for all of these classified leases.

Extension Features

Using the ARCHIBUS Extension for Lease Accounting, users can fully comply with the new accounting guidelines. The Extension leverages the standard ARCHIBUS Lease Administration and Cost Administration applications, and the core ARCHIBUS features for accounting for capital and expense costs, cash flow projections and analysis, CPI escalations, and multi-currency conversions.

The table below summarizes activities and requirements your compliance teams must consider, and describes how ARCHIBUS Extension for FASB ASC 842 helps you meet these requirements.

Activity and Requirement ARCHIBUS Provision
Lease Administration
Provide structured data collection to support new lease decisions. The Extension contains an interactive questionnaire to gather the specific elements required by ASC 842 in a structured manner that supports stakeholder reports and analyses. These elements include lease term, automatic transfer of ownership, useful life of the asset, fair market value of the asset, designated parking spaces, and whether the facility is specialized to purpose.
Provide structured cost collection for capitalized costs. If a lease meets guidelines for capitalization, the interactive questionnaire also collects supporting data such as discount rate, incremental borrowing rate, initial direct cost, CPI escalations, lessor allowances, and impairment costs.
Classify leases as finance or operating leases. The collected lease data provides the basis for classification whether a lease transfers effective control of the asset to the lessee or is a specialized facility. The program calculates key ratios to support the classification – such as the ratio of the present value of applicable lease payments to the fair market value.
Document options and assumptions that determine whether option renewal is “reasonably certain.” The lease options include structures for documenting purchase options, economic incentives to renew, and comparison of rent to market rate.

Split lease and non-lease components.

Separate costs that may or may not require amortization.

ARCHIBUS cost categories separate lease cost records that record base rent, escalations and CPI from service elements, such as maintenance. The ARCHIBUS cost categories naturally separate lease and non-lease components, which have different treatment under the regulations. These cost categories include base rent, property taxes, maintenance costs, lessor analyses, and impairment charges.
Calculate the schedule of costs. The program calculates the monthly and yearly schedule of lease payments, principal, interest, amortization, lease expense, lease liability, and remaining right-of-use asset value.
Review the financial structure of the lease in overview. Summary reports present the schedule of charges, such as the value of the right-to-use asset and lease liability over the lease term.
Analyze the impact of ASC 842 to support leasing and lease vs. buy decisions. Charts compare the impact of values such as cash and equity value over the life of the lease to express the impact of the change in treatment. Compare key values, such as present value of lease payments against market value of the asset, or the expected remaining life of the asset versus the term of the lease.
Coordinate with Controller and financial stakeholders for financial and audit reporting.

Portal-style home pages and purpose-designed reports deliver both summary and detailed reports of amortization of right-of-use assets, interest on lease liabilities, operating lease expenses, as well as principal and interest run out of the lease obligation.

Summaries of leases, their descriptions and classifications are also available, as are ad-hoc reports on the lease and cost data.

Restate leases mid-term, as required. The lease forms record any lease modifications, such as change in area amounts and the date, lease renewals that change the term, lessor allowances, impairment charges, or new provisions that change the right-of-use asset value. The program uses these to recalculate cost schedules.
Upload right-to-use asset entries and offsetting capital lease obligation liabilities for accounting. Sub-ledger reports calculate the entries for spreadsheet, flat-file or automatic export to the accounting system, in sync with the organization’s monthly closings.
Adjust recognized charges if there is a material change in the lease. Ledger reports provide updated sub-ledger entries recalculated from new conditions, such as economic events that provide significant economic incentive to exercise or refrain from exercising an option. Entries detail changes in right-of-use asset value, changes in lease liability value, and the gain or loss from the events.
Provide information about the nature of lease and subleases.

Lease abstract and data elements information include:

  • General description
  • Basic and terms and conditions, as well as conditions determining variable lease payments
  • Existence of options and their terms and conditions
Provide information about future leases that create significant rights and obligations for lessees. The lease system includes present, historical, and future leases.
Provide information about key judgements and assumptions made in classifying leases.

The centralized registry of lease information includes:

  • Recorded responses to questionnaire questions for each lease document the key assumptions and judgments
  • Cost categories separating leased and non-leased cost components
  • The discount rate assumed in calculations

The information is available in both standard and ad-hoc reports.

The ARCHIBUS Extension for Lease Accounting requires:

Deployment must include Web Central Core Program and Application Connection Points (ACPs).

Help topic

Real Estate Portfolio Management / Extension for Lease Accounting / Overview

Process Navigator

Real Estate Portfolio Management / Lease Administration / Lease Portfolio / Lease Classification Wizard

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