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Final Lease Accounting Standards Issued

February 26, 2016

CHICAGO, February 26, 2016 -- After more than five years, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) lease accounting rule changes are complete. The most significant change is that assets and liabilities created from leasing transactions are brought on the balance sheet. These new standards apply to all leases including equipment, real estate, and other leasing arrangements.

Originally intended as a joint project between the IASB and the FASB, the boards were unable to reach agreement and have issued separate standards. The IASB issued their standard on January 13, 2016 and the FASB released their final standard on February 25, 2016. The prior lease accounting rules will no longer apply. The effective dates of the respective standards are:

Public Companies

FASB - Annual and interim periods beginning after December 15, 2018

IASB - Annual periods beginning on or after January 1, 2019

Private Companies

FASB - Annual periods beginning after December 15, 2019

IASB - Annual periods beginning on or after January 1, 2019

The new standards will require greater involvement of accounting and finance management during implementation, as well as increased ongoing post-adoption management. Lease Harbor LLC has the necessary software solution to leverage existing lease data and the financial management expertise to work with clients to successfully assess, plan, and implement the rules.

Application Development Status and Readiness

After the 2011 lease accounting preview release in our industry-leading Harbor Flex system, Lease Harbor LLC embarked on a multi-year investment and development effort to build our third-generation system. The new system includes significant enhancements for the final lease accounting standards and many other portfolio and project management features.

With engineering and development substantially complete, Lease Harbor LLC’s new system will allow plenty of time for our clients to prepare for, implement, and maintain their lease portfolios on the new standard(s). Lease Harbor LLC’s capital lease solution supplements the two existing parallel ledgers that provide cash basis accounting, and accrual basis deferred rent accounting, with a third parallel and integrated ledger for tracking capital leases on the new standards. These ledgers are secured via separate user rights if needed, for management across different functional groups and reporting responsibilities within an organization.

Conclusion

Lease Harbor LLC’s third generation system will ease our clients’ transition to the new lease accounting requirements both efficiently and accurately. Additionally, we will provide the necessary resources for working through the technical accounting implementation and post-implementation management. Our senior financial personnel are available for consultation and to work alongside clients, their real estate service providers, and auditors throughout the adoption process. Lease Harbor LLC will continue to lead the industry with superior engineering, technical services, and support. Please contact info@leaseharbor.com with any questions.

About Lease Harbor

Lease Harbor LLC is an industry-leading Application Service Provider providing state-of-the-art lease administration tools for corporate real estate departments worldwide. For more information and to find out how Lease Harbor LLC can help your organization, please visit the company’s Web site at www.leaseharbor.com.


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