As we’ve seen the past few years, there’s a difference between international guidelines and how each local municipality enforces them. Countries have the power to make their own laws, though there’s a system of checks and balances that aims to keep everything fair.
This is even true for commercial real estate. There are not only different types of national lease accounting standards (e.g. ASC 842, IFRS 16, GASB 87), but local guidelines and considerations to follow as well. Let’s take a look at their differences.
Types of FASB Lease Accounting Standards
Lease accounting is a crucial part of any CRE pro’s recording and reporting for properties in their portfolio. To maintain compliance across the industry and ensure professionals are tracking, updating and managing leases properly, certain lease accounting standards are released by the Financial Accounting Standards Board (FASB) periodically. Lease accounting standards include:
- ASC 842
- IFRS 16
- GASB 87
There are local versions of these standards, as we’re about to cover, and they have different details, effective dates and targets.
National vs. Local Differences
The differences in local versions of lease accounting standards vary by country (e.g. Australian Accounting Standards Board) and typically don’t affect the basic principles of disclosing finances and entering balance sheets correctly. The specific lease and company type will also have a role in the individual standards used for a certain property.
Other standards have several sub-standards to track, as is the case with ASC 842, which can include intangible assets, inventory, assets under construction and more. Standards can also be replaced on occasion, making for a lot of moving parts and versions CRE pros need to track.
How CRE Software Helps
The number of standards and elements of them that you need to think about can overwhelm you in a hurry if you aren’t organized or have the right commercial real estate software in your corner. With Quarem, for example, you don’t have to worry about knowing all of the details of ASC 842/IFRS 16 and similar standards. Quarem has the module you need and the data automation required to maintain standards for both national and local versions. From easy system navigation and setup to organizing your income/expense schedule easily, there are a variety of features in Quarem to help make your lease accounting easier.
If you’re interested in seeing how Quarem helps with FASB lease accounting standards compliance, request a demo today.