Lease Accounting Landscape (ASC 842)

1. Lease Accounting Landscape
Lease Accounting Software Landscape
Lease Accounting Implementation Experience
Liz Hahn
Lawson James
Mark Melanson

2. Projects SIG Board of Directors
• Liz Hahn
– President | Tait Corporation
email: Hahn.com@me.com
• Lawson James
Managing Partner | Managing Partner | Horizon Projects Consulting Group
email: Lawson.James@hpcons.net
• Rob Kennedy
– Co-Founder of Rapid Rec | Director of PASO Consulting
email: Rob.Kennedy@pasoconsulting.com
• Yugan Mittell,
– Managing Partner | Projects Expert LLC
email: Yugwan@projectsexpert.com
• Mark Melanson,
- Owner | Oracle Applications Consultant
email: mfmelanson@gmail.com

3. Current & Future Webinars 2019
• June GETTING READY FOR YOUR LEASE ACCOUNTING PROJECT
– Lawson James
• July DESIGN CONSIDERATIONS IN A GLOBAL IMPLEMENTATION
Understanding key areas of Projects enhancement required in a
global environment
– Rob Kennedy
• Sept BUSINESS TRANSFORMATION – PROCESS &
TECHNOLOGICAL IMPROVEMENTS
– Liz Hahn
• Oct – PLANNING & SCHEDULING IN CLOUD PPM
– Yugwan Mittal

4. Agenda
• What is ASC 842?
• Implications to Oracle Projects & Oracle Fixed Assets
• Oracle Property Manager Integrations
• Key Functionality to Consider
• Sample Journal Entries – new GL Accounts Required
• Industry Landscape
• Implementation Experiences
• Audience Survey
• Survey Questions

5. Objective of this webinar?
• WHAT:
The objective of this webinar to provide participants with information such
that they gain an understanding of the lease accounting concepts and
market landscape. Additionally participants will gain an appreciation for
key factors to consider for their lease accounting implementation project.
We will share selected project and systems implementation experiences.
• WHO:
The audience is a combined Oracle Projects, Property Manager, General
Ledger & Fixed Asset audience for both ERP and Cloud.

6. What is ASC 842 (the new lease accounting standards)?
• In 2016 FASB issued ASC 842 requiring both Public and Privately Held
Companies to account for Operating Leases greater than 1 year as Capital
Leases. In summary both the US ASC 842 and, internationally, IFRS
16 requiries a lessee to recognize a lease liability for each lease contract
based upon the present value of future lease payments with an offsetting
right of use asset.
• WHEN REQUIRED: Public Companies are required to account for the
leases in 2019, Private Companies will be required to report this way for
Fiscal Years beginning 12/15/2019.

7. Implications to Oracle Fixed Assets
• It was common for companies to include capital leases in Fixed Assets,
with the deployment of the new lease accounting standard, now all leases
are maintained in it’s own subledger.

8. Historical flow for capital leases
iProcurement
General Ledger
Purchasing
Accounts Payable
Project Accounting
Fixed Assets
Cash Management
OTL
HRMS
Payroll
Accounts Receivable

9. With Property Manager: Capital & Operating leases
iProcurement
General Ledger
Purchasing
Accounts Payable
Project Accounting
Fixed Assets
Cash Management
OTL
HRMS
Payroll
Accounts Receivable
Property Manager

10. Functionality Provided by Oracle Property Manager
• Manage Critical Dates
• Create GL Journal Entries
• Manage Option Start & End Dates
• Submodule that focusses on equipment leases
• Automate Payment and Invoice Creation
• Automate Assessment of Rent Increases
• Automate the Assessment of Variable Rent
• Manage Space Definition
• Integration with CAD System
• Maintain Detailed Lease History
• Integration with E-Business Suite (AP, AR, GL)
• Manage Lease Clauses

11. New GL Accounts
• Right of Use Asset – Operating
• Right of User Asset – Finance
• Lease Liability – Operating
• Lease Liability – Finance
• Variable payment – client specific

12. Sample Journal Entries with the intro of the new lease
accounting standards

13. Sample Journal Entries with the intro of the new lease
accounting standards

14. Software Solution Options

15. 3rd Party Software Solution Options - Summary
• iLeasePro
• AMT Direct
• Manage Path
• ProLease
• Costar
• IBM Tririga
• Visual Lease
• Lucernex
• Power Plan
• Lease Accelerator
• Nakis (SLAN)
• Net Lease

16. Software Solution Options

17. Software Solution Options

18. Software Solution Options

19. Implementation Experiences: Oracle
• Pros
- Integration with Oracle AP & AR remains unchanged
- Oracle Product Development Team is responding rapidly to patch requests
and is enhancing core functionality to address ASC 842 requirements. The
majority of the functionality was delivered in June 2018.
• Cons
- Disclosure Reports need to be built by the customer
- Reporting to support reconciliation needs improvement
- Revision (amendments/terminations) accounting needs improvement

20. Implementation Experiences: Non Oracle Providers
• Pros
- Nimble
- Better positioned to respond to changing FASB rules
• Cons
- Integration with Oracle GL & AP needed to be developed
- Some 3rd party vendors are victims of their own success
- not able to scale fast enough to handle client requests etc.

21. Lease Accounting Landscape
Q & A