Help (FASB/IFRS)
Table of Contents
Administration | Users
User Roles
Below is the list of user roles and their associated permissions.
| Administrator | Accounting Administrator | User | Read Only |
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My Leases Tab: |
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View Leases (and Approve Leases if Review is enabled) | Yes | Yes | Yes | Yes |
Edit / Clone / Delete Leases | Yes | Yes | Yes | No |
Export Leases | Yes | Yes | Yes | Yes |
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Add Leases Tab: |
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Add Leases | Yes | Yes | Yes | No |
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Administration Tab: |
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Users | Invite / Edit | View Only | View Only | No Access |
Groups | Add / Edit | View Only | View Only | No Access |
Policies | Manage | Manage | View Only | No Access |
Reporting Entity | Add / Edit | Add / Edit | No Access | No Access |
Customization | Add / Edit | Add / Edit | No Access | No Access |
GL Accounts | Add / Edit | Add / Edit | No Access | No Access |
Currency | Add / Edit | Add / Edit | View Only | No Access |
Email Alerts | Add / Edit | Add / Edit | View Only | No Access |
Administration | Reporting Entity
Reporting Entity
Reporting Entity is the financial reporting entity for which you produce financial statements. At your organization, a reporting entity might be known as a company, business unit, subsidiary, fund, institution, organization or office.
In Administration/GL Accounts, each reporting entity has its own set of GL Accounts.
There is no hierarchy for reporting entities in the Lease Accounting product; instead, users select the reporting entities to combine for reporting at My Leases and each combination can be saved as a Custom View.
Accounting Standard
Selecting an Accounting Standard at Administration/Reporting Entity of either FASB ASC 842 or IFRS 16.
If a lease needs to be reported under both FASB ASC 842 and IFRS 16, we recommend that you enter the same lease twice if you would encounter any of the following situations:
Initial Application Dates. Depending on the organization, different initial application dates (e.g., 1/1/19 for IFRS, 1/1/22 for FASB) could drive differences in calculations:
Different discount rates
Different existing balances under previous accounting guidance affecting initial ROU Asset value
Different transition policy election FASB/IFRS could impact calculations. See Accounting Policy templates at Administration/Policies.
Lessee:
Operating Leases. IFRS 16 excludes Operating leases. A lease classified as operating under FASB ASC 842 would be a finance lease under IFRS 16.
Footnote: Selecting the IFRS 16 footnote excludes operating leases from the export.
Minimum Exemptions. IFRS has a $5,000 exemption limit that has no corollary for FASB.
Discount Rate. For nonpublic companies, the FASB allows for the risk-free rate election for the discount rate and IFRS does not.
Lease Revisions. If a lease modification or a lease remeasurement resulted in a change in classification under FASB from finance to operating lease, the revised lease would have to be entered as a finance lease to properly report under IFRS 16.
Index-Based Payments. Lease payments based on an index need to be recorded as a remeasurement under IFRS and a variable expense/revenue under FASB, although this might be immaterial.
Lessor:
Classifications. FASB ASC 842 and FRS 16 have different Classifications and therefore, different accounting for each Classification. Therefore, it is recommended you enter each lease twice for reporting under each standard.
FASB ASC 842: Operating, Sales-Type, Direct Financing
IFRS 16: Operating, Finance
Initial Application Date:
Summary Guidance: The Initial Application Date is the beginning of the earliest period presented in the financial statements in which the lease standard is first applied.
An election can be made to not restate prior periods.
For a non-public company not restating prior periods and with a December 31 fiscal year end, the Initial Application Date is January 1, 2022.
For a non-public company not restating prior periods and with a June 30 fiscal year end, the Initial Application Date is July 1, 2022.
Download this file to calculate your initial application date: IAD Calculator.xlsx
Detailed Guidance: To select your Initial Application Date, you must first determine your Effective Date. U.S. private companies have an Effective Date for fiscal years beginning after December 15, 2021, while U.S public companies and international companies (under IFRS 16) have an Effective Date for fiscal years beginning after December 15, 2018. Companies have 2 options for an Initial Application Date:
Option 1: Apply lease standard only to the most recent period without restatement of prior periods presented. Thus, Initial Application Date would be the beginning of the most recent period presented in the financial statements (i.e., the same as the Effective Date).
Option 2: Apply lease standard to all prior period(s) presented in the financial statements; thus, Initial Application Date would be the beginning of the first period presented (i.e., prior to the Effective Date).
Example:
Example: Company with 1 prior period presented.
Other Guidance: Initial application date inputted upon Adding a new Reporting Entity can also vary depending upon situation
Reporting Entity Created due to Transition from Other Solution (e.g., software, spreadsheet, etc.) - Users have the option to use the following:
Beginning of the current or previous fiscal year
Original implementation date
Visit our Initial Application Date Calculator for more information
Reporting Entity Created due to New Business Entity - Typically, the Initial Application Date is the 1st of the month the business is created.
Reporting Entity Created due to M&A - Reporting Entities added due to M&A are managed on a case-by-case basis. Consult support@crunchafi.com for specific guidance.
Technical Guidance:
Local Currency:
Summary Guidance: Local Currency is the currency used to pay your lease obligations (typically the currency used in the entity's particular geographical location). Local Currency is used in the following tabs:
Administration | Reporting Entity: User selects the Local Currency default for your Reporting Entity.
Add Lease: The Local Currency default from Administration | Reporting Entity will appear, but the user is able to select a different currency.
My Leases: Local Currency reports can be exported by selecting the Local Currency tab.
Functional Currency:
Summary Guidance: Functional Currency is the currency of the primary economic environment in which your entity conducts its business. The functional currency is usually either the local currency or the currency of its parent company.
Technical Guidance:
Administration | Policies
Require Review + Approval for every new Lease created:
This feature requires at least 2 users, as the user submitting a lease for approval must be different than the user approving the lease. When you select the Require Review policy at Administration/Policies, the following is true for any subsequently entered lease or lease revision:
Review Tab: When adding a lease, the Review tab only appears when Require Review policy is selected. The Review tab requires a user to submit a lease for review by another user.
Note: Users can optionally choose to send an email notification to reviewer(s) when a lease is ready for review. A notification cannot be sent to the user entering the lease.
Incomplete Status: Before submitting a lease for review, the lease remains in Incomplete status even if all required data fields are entered.
Review Status: After submitting a lease for Review, the lease status changes from Incomplete to Review.
Reporting: Leases in either an Incomplete or Review status cannot be exported at My Leases.
Reviewer: Any User can review and approve a lease in review except the last person to edit the lease. Approving a lease changes the status from Review to Complete and the lease can then be included in My Leases exports.
Lease Edits: When a lease is edited, the lease status is returned to Review, requiring approval by any user who did not last edit the lease.
Note: A lease created before Require Review is selected at Administration/Policies will not require a review even for edits made after Require Review is selected at Administration/Policies.
Administration | GL Accounts
Fixed Asset:
Fixed Asset GL Accounts are only used if you have a Finance Lease with an ROU Asset Life greater than the Lease Term (entered in the Add Leases tab). The final journal entry will transfer the remaining ROU Asset balance to a Fixed Asset GL Account.
GL Accounts for Existing Balances under Previous Lease Accounting Guidance:
GL Accounts at Administration/GL Accounts under the heading “Existing Balances Under Previous Lease Accounting Guidance” are used to remove balances from your opening balance sheet upon initial application of ASC 842 and/or IFRS 16. After entering your GL Accounts (or modifying the default GL Accounts), follow the steps below:
If your existing balance under previous lease accounting guidance is a liability:
Go to Add Lease screen under the section “Lease Payments and Classification.”
Select a Liability GL Account from the dropdown.
Enter the existing balance as a positive value.
The initial journal entry will remove the liability by debiting the existing balance entered on Add Lease screen. For Lessees, the offsetting credit will be to the ROU Asset. For Lessors, the offsetting credit will be to Revenue or Deferred Rent depending on the circumstances.
If your existing balance under previous lease accounting guidance is an asset:
Go to Add Lease screen under the section “Lease Payments and Classification.”
Select an Asset GL Account from the dropdown.
Enter the existing balance as a positive value.
The initial journal entry will remove the asset by crediting the existing balance entered on Add Lease screen. For Lessees, the the offsetting debit will be to the ROU Asset. For Lessors, the offsetting credit will be to Revenue, Deferred Rent or Initial Direct Cost Asset depending on the circumstances.
Lessee Examples
General Ledger Accounts for Revisions:
General Ledger (GL) Accounts at Administration/GL Accounts under the heading “Revisions” have two different GL Account types:
1. Suspense Account for Transferring Balances
2. Gain/Loss Account
Administration | Currency
Foreign Exchange Rates:
Summary Guidance: When entering foreign exchange rates in the fields “Currency (From-To),” the “From” is the currency you are starting with and the “To” is the ending currency (i.e. the currency you are translating to). For example:
From = Local Currency of Lease; let’s assume USD
To = Reporting Currency of a reporting entity; let’s assume EUR
“Currency (From-To)” = USD - EUR (see below: $1 USD = 0.85€ EUR at EOM at 2024-01)
EOM Rate = Used to translate ending balance sheet values
Ave Rate = Used to translate the transactions made throughout the month
Download the below files displaying the translation of each column in the Amortization Schedule.
Lessee:
Amortization Schedule for Functional Currency: Functional_Currency_Translation_Lessee.xlsx
Amortization Schedule for Final Reporting Currency: Final_Reporting_Currency_Lessee.xlsx
Lessor:
Amortization Schedule for Functional Currency: Functional_Currency_Translation_Lessor.xlsx
Amortization Schedule for Final Reporting Currency: Final_Reporting_Currency_Lessor.xlsx
Foreign currency translation is guided by ASC 830, Foreign Currency Matters.
Monetary assets and liabilities (cash, accounts receivable, accounts payable, and long-term debt) are measured at the end of each reporting period based on the then current exchange rates, resulting in foreign currency gains and losses, which are recorded in current period net income.
Nonmonetary assets and liabilities (inventory and property, plant, and equipment) are initially measured using historical exchange rates. Because there should be no further reason for translation, all aspects of the ongoing accounting for these items (e.g., depreciation, impairment, lower of cost or market) should be measured in terms of the operation’s functional currency. In other words, you translated it once at the start date of the lease, no need to keep translating it.
Technical Guidance:
My Leases
Lease Status:
Incomplete: This status indicates that all required fields are not filled out. Leases in an Incomplete status cannot be exported at My Leases.
Review: This status is only available if Require Review policy is selected at Administration/Policies. Review status requires a reviewer (other than the user who last edited the lease) to approve the lease. Leases in a Review status cannot be exported at My Leases.
Complete: This status indicates all required fields are entered. If Require Review Policy is checked, this lease was also approved by a reviewer.
Deleted: This lease was deleted. Leases in a Deleted status cannot be exported at My Leases.
Data By Lease
This selection produces a tab in the export called “Data By Lease” with values for each selected lease for the GL Start Date to the GL End Date. This feature is currently available for the following report exports:
Journal Entries
“Data by Lease” tab replaces the “Data” tab.
Journal entry debit and credit values are presented and aggregated per lease with each revision shown separately, sorted in descending modified date order.
Lease groups (original lease and their corresponding revision leases) are separated by alternating light turquoise cell highlights.
Multiple local currencies in one report is supported for the Data by Lease report. Regular Journal Entry report still only supports one local currency per report, and requires user to generate either a Functional Currency or Reporting Currency report.
Amortization Schedule
Additional “Data by Lease” tab supplements the existing “Data” tab.
Amortization values are presented and aggregated per lease with each revision shown separately, sorted in descending modified date order.
Foreign Currency Translation (Functional Currency & Reporting Currency)
Summary Guidance: Ending balance sheet values are generally translated at EOM rate, while all other transactions are translated at the Average rate, except for balances translated at their Functional Currency at Historical rate. See Administration | Currency for how to enter EOM and Average foreign exchange rates.
Download the below files displaying the translation of each column in the Amortization Schedule.
Lessee:
Amortization Schedule for Functional Currency: Functional_Currency_Translation_Lessee.xlsx
Amortization Schedule for Final Reporting Currency: Final_Reporting_Currency_Lessee.xlsx
Lessor:
Amortization Schedule for Functional Currency: Functional_Currency_Translation_Lessor.xlsx
Amortization Schedule for Final Reporting Currency: Final_Reporting_Currency_Lessor.xlsx
Foreign currency translation is guided by ASC 830, Foreign Currency Matters.
Monetary assets and liabilities (cash, accounts receivable, accounts payable, and long-term debt) are measured at the end of each reporting period based on the then current exchange rates, resulting in foreign currency gains and losses, which are recorded in current period net income.
Nonmonetary assets and liabilities (inventory and property, plant, and equipment) are initially measured using historical exchange rates. Because there should be no further reason for translation, all aspects of the ongoing accounting for these items (e.g., depreciation, impairment, lower of cost or market) should be measured in terms of the operation’s functional currency. In other words, you translated it once at the start date of the lease, no need to keep translating it.
Technical Guidance: