Understanding recent lease accounting changes

Lease accounting standards have undergone major updates in recent years. These changes affect how companies recognize, measure, and report lease agreements in their financial statements. The shift began with global regulatory bodies like the FASB, IASB, and AASB issuing updated standards: ASC 842, IFRS 16, and AASB 16.

Why all the lease accounting changes? The answer lies in improving transparency. Under old standards like ASC 840, many operating leases weren’t recorded on the balance sheet. This led to inconsistencies in how liabilities were reported. The change in lease accounting was needed to close this gap.

The new lease accounting standards require both lessees and lessors to disclose more detail. Lessees, in particular, must now record right-of-use (ROU) assets and lease liabilities for most lease types. These lease accounting changes are intended to improve comparability across industries and provide a clearer picture of financial obligations.

For example, ASC 842, issued by the FASB, took effect for public companies in 2019 and for private companies in later years. The rollout required significant updates to internal processes and systems. Many businesses had to rework their lease accounting policy and implement new software solutions.

These updates don’t just affect accounting teams. Procurement, legal, and IT teams must work together to collect lease data, verify classifications, and ensure compliance. And because the standards continue to evolve, organizations need to stay alert to the next lease accounting standard update. Future FASB lease accounting changes are likely to build on the foundation set by ASC 842.

The real-world impact is clear: more accurate reporting, better compliance, and the need for updated tools. Whether it's the FASB operating lease accounting change or ongoing improvements, every company must evaluate its readiness and update its systems accordingly.

How SOFT4Lessee addresses lease accounting changes

SOFT4Lessee is built specifically to help businesses handle the change in lease accounting standards. As companies adapt to new lease accounting standards 2022 and beyond, SOFT4Lessee makes compliance easier through automation, clear workflows, and support for complex lease types.

One of the key features is lease agreement management. Organizations can store, track, and manage all lease agreements in one place: real estate, equipment, vehicles, or others. The system supports centralized lease tracking with version control, expiration alerts, and approval workflows.

SOFT4Lessee automatically classifies leases under standards like IFRS 16, ASC 842, and AASB 16. This is especially helpful for large lease portfolios where manual classification could lead to errors. The software determines whether a lease should be categorized as operating or finance, based on the rules provided by each standard.

A core advantage is automation. For instance, SOFT4Lessee automates remeasurements and handles modifications in real-time, reducing manual errors. It also calculates lease liabilities and right-of-use assets using built-in logic. This ensures all entries follow the correct treatment from the start.

If your business manages both real estate and equipment leases, SOFT4Lessee can handle both without needing separate systems. It’s designed to support the full lease portfolio, with consistent logic across lease types. This saves time, reduces risk, and improves consistency.

Because the software is built on Microsoft Dynamics 365 Business Central, it works seamlessly with other processes managed in this ERP. It also connects to other major platforms, allowing you to sync lease data with finance systems. This makes it easier to comply with updated standards without changing your core financial tools.

As companies continue adapting to lease accounting changes, SOFT4Lessee provides the structure and flexibility they need to stay compliant.

Ensuring seamless transition and implementation

Transitioning to the new lease accounting standards isn’t always simple. Organizations need to update their systems, policies, and processes to comply with standards like ASC 842 and IFRS 16. The process requires planning, testing, and cross-functional collaboration.

SOFT4Lessee supports this with a structured approach. The system lets companies simulate transitions using the Effective Date method or the Comparative method. This allows finance teams to understand how the new rules will impact the balance sheet before making changes.

Transitioning to ASC 842? SOFT4Lessee provides scenario modeling that estimates balance sheet impacts before going live. This feature helps decision-makers adjust their strategies and ensure clean implementation.

SOFT4Lessee supports data import/export via Excel or web services, which speeds up onboarding. Whether you're importing 20 leases or 2,000, the process is smooth and trackable. The system also includes detailed audit trails, so you can see who made changes and when.

Document management is also included. Teams can upload lease contracts, amendments, and notes and link them directly to the digital lease record. This keeps everything in one place and simplifies audits or compliance reviews.

It’s also important to align your internal controls with the updated lease accounting standards. This means revisiting approval workflows, ensuring segregation of duties, and confirming that lease classification and remeasurement procedures are followed consistently.

SOFT4Lessee makes this easier by supporting role-based permissions. Each user can be assigned specific access, whether they’re reviewing contract terms, approving changes, or managing journal entries. This ensures traceability and reinforces accountability.

Organizations implementing the new lease accounting standards often ask how long the transition takes. With SOFT4Lessee, most teams can go live in under 90 days. The system includes a setup wizard, data validation, and training resources to support onboarding.

If you're wondering how to implement the new lease accounting standard without disrupting other projects, SOFT4Lessee is designed for parallel adoption. You can continue running legacy systems during the simulation phase and then switch once all data has been verified.

Integration, deployment options, and flexible pricing

Integrating a lease accounting system with your existing software can make or break implementation. SOFT4Lessee is designed for smooth G/L journal export to leading ERP platforms, including SAP, Oracle NetSuite, Sage, and Xero.

This ensures that financial data remains consistent and reduces manual effort. Whether it's syncing general ledger entries or exporting reports, the integration is designed to be clean and simple.

The system's flexible architecture also supports multi-entity setups, ideal for holding companies and conglomerates. Each entity can operate independently while reporting at the group level. This is critical when preparing consolidated financial statements under evolving lease accounting standards.

Deployment is flexible. You can choose between:

• Cloud-based deployment (SaaS) for minimal IT setup

• On-premises deployment for greater control and data security

SOFT4Lessee offers flexible pricing as well. Small businesses can start with a €500 (one-time fee) Excel calculator for limited lease portfolios. For larger companies, pricing starts at €190 per month, with modular options to add users and features.

Ready-for-you compliance resources

Regulations don’t stand still. That’s why SOFT4Lessee includes a frequently updated resource center to help customers stay informed.

As accounting standards evolve, the system is updated with new templates, rules, and guidance. The resource center includes:

• Articles on FASB lease accounting changes

• Updates on new lease accounting standards 2022 and beyond

• Webinars and newsletters summarizing the latest changes

Latest insights and industry updates are critical for ongoing compliance. SOFT4Lessee supports this by publishing regular updates and how-to guides, making it easier to adapt your lease accounting policy to match the most recent standards.

This ongoing education helps your team stay current, reduces reliance on outside consultants, and positions your business to react quickly to any future lease accounting standard update.

Frequently asked questions

What are the main changes in the latest lease accounting standards?

Most leases must now appear on the balance sheet, with right-of-use assets and lease liabilities. Lease classifications and disclosure requirements have also been expanded.

How can my organization ensure compliance with IFRS 16 and ASC 842?

Use a solution like SOFT4Lessee to automate classification, reporting, and disclosures. It ensures calculations match current standards and reduces manual work.

What does the implementation process for new lease accounting standards involve?

It involves gathering lease data, classifying leases, running transition simulations, and updating internal policies. SOFT4Lessee supports this through scenario modeling and import tools.

How does SOFT4Lessee integrate with our existing ERP system?

It exports G/L journals to SAP, Oracle, Sage, and others to sync lease data and ensure accurate financial reporting.

What deployment options and pricing models does SOFT4Lessee offer?

You can choose cloud or on-premises deployment. The pricing starts at €190/month for the SOFT4Lessee software, while there is an Excel Calculator option for small lease portfolios at a €500 one-time fee.

How do FASB lease accounting changes affect financial statements?

FASB’s lease accounting updates under ASC 842 increase reported assets and liabilities. SOFT4Lessee automates these calculations and ensures compliance.

How do we manage international leases under different standards?

SOFT4Lessee supports multiple standards (ASC 842, IFRS 16, AASB 16) within the same system, enabling global compliance with localized settings.

How do changes to lease accounting affect lease renewals and modifications?

Events like renewals trigger remeasurements. SOFT4Lessee tracks these automatically and adjusts amortization schedules.

Can SOFT4Lessee help with audit preparation?

Yes. The system maintains a full audit trail and generates disclosure reports, maturity analysis, and compliance summaries.