A sea change in how corporations account for their lease commitments is on the horizon. The Financial Accounting Standards Board and the International Accounting Standards Board have released their collectively proposed new lease accounting standards. These newly proposed standards will eliminate the operating lease treatment the vast majority of real estate leases have qualified as over the past thirty five years. Instead, all real estate leases with a maximum possible term greater than one year will be required to be capitalized and carried as an asset and liability on the lessee's balance sheet. The days of the operating lease – which only impacted an entity’s P&L – are soon to be gone.

CyberLease – as experts in the field of lease auditing, accounting, analysis and negotiation – is the first in the industry to establish a dedicated practice group to provide the services necessary for corporations and their various stakeholders to measure, monitor and report the impact of the newly proposed lease accounting standards. These new standards, when finalized sometime in 2011, will impose new and material burdens on all parties to a commercial real estate lease, but particularly on tenants with multiple leases since their core business is something other than the leasing of real estate.

Our expertise in performing lease compliance audits, accounting, lease negotiations and our intimate knowledge of lease structures and their associated financial impacts means we are uniquely qualified to provide a cutting edge service – our “LASER Service” – to lessees. The work involved to transition to the new standards will be substantial and time consuming, but the necessity for that work to be performed by experts in a timely and cost effective manner is critical, as the end result impacts the balance sheet. Hence, our LASER Service is designed to provide real estate lessees with independent, responsive and accurate reporting of the financial statement impact of each lease.

As one example of our unique perspective and expertise, CyberLease’s analysis of the newly proposed standards revealed that many other advisors have been offering incorrect guidance to tenants with respect to the capitalization of tax and insurance expenses imbedded in their lease obligations (click here to learn more about this important issue). FASB has confirmed CyberLease’s interpretation and application of the proposed standards. Our analysis has also identified the following CORE Components any lease accounting process must incorporate in order to be effective:

 

 

CyberLease's LASER Service has been designed to help corporate real estate and finance groups of commercial tenants understand, manage and confidently report the financial statement impact of their lease commitments.  View the detailed explanation of the CORE Components to better understand why CyberLease is uniquely qualified to provide its LASER Service to your organization.