Lease Accounting Has Changed Permanently. Is Your Business Ready?
Lease accounting has evolved — and so have the standards. Whether you’re navigating ASC 842, IFRS 16, or GASB 87, accurate lease accounting is now a board-level concern, not just a back-office task. Our specialized accountants help US businesses streamline lease data, automate calculations, and stay audit-ready across every standard.
From initial adoption and lease abstraction to ongoing monthly entries, modifications, renewals, and year-end disclosures, our expert team handles every phase of the lease accounting lifecycle. We:
- Correctly identify lease components in service contracts
- Calculate present values using the right incremental borrowing rate (IBR)
- Classify leases as operating or finance under ASC 842’s two-model approach
- Maintain amortization schedules and keep GL accounts reconciled
- Record journal entries each period — interest, amortization, and initial recognition
- Produce footnote disclosures that withstand audit scrutiny
- Assess and communicate balance sheet impact to lenders and covenant stakeholders
Protect Your Debt Covenants
ASC 842 increases both assets and liabilities on your balance sheet — which can shift leverage and liquidity ratios that lenders monitor. We assess the financial statement impact of your lease portfolio before close, help you model covenant implications, and prepare clear documentation you can share directly with your bank or lender.
Accurate. Compliant. Always On.
Our outsourced lease accounting services are built to fit your goals and workflow. Every lease on your balance sheet is correctly measured, every period is closed clean, and every auditor question has a documented answer.
Not Sure Where You Stand? Start with an ASC 842 Readiness Assessment.
Before moving into full managed service, many clients begin with our structured gap assessment — a side-by-side analysis of where your current lease accounting stands versus what ASC 842, IFRS 16, or GASB 87 requires. You receive:
- A complete inventory of leases identified across your contracts and service agreements
- A gap analysis comparing current processes to standard requirements
- A prioritized remediation plan with timeline and effort estimates
- Practical expedient recommendations tailored to your business size and structure
- A memo ready to share with your board, auditors, or CFO
This is the lowest-risk way to get started — and the fastest path to knowing exactly what needs to change.
End-to-End Lease Accounting Services, Tailored to Your Needs
We manage the full lifecycle of your lease portfolio — from initial adoption through ongoing compliance — with the precision your auditors expect.
We extract and abstract all relevant lease data — commencement dates, lease terms, renewal and termination options, payment schedules, and lease vs. non-lease components — and build your complete lease register.
We review every contract and service agreement to identify embedded leases and classify them correctly. Under ASC 842, each lease is categorized as operating or finance; under IFRS 16 we apply the single-model approach. Short-term and low-value exemptions are applied where applicable.
We calculate the present value of future lease payments using the correct IBR or implicit rate, producing the initial ROU asset and lease liability balances with full documentation — including a memo that satisfies auditor review.
We build lease amortization tables covering the full lease term — principal and interest on the lease liability alongside ROU asset amortization — using the effective interest method for liabilities and straight-line for operating leases.
Our accountants prepare and post all lease-related journal entries each period — interest expense, amortization, lease payments, and initial recognition entries — keeping GL accounts clean, separate, and reconciled.
When leases are extended, terminated early, or modified in scope, we reassess the lease term, recalculate the liability and ROU asset at the modification date, and document the event thoroughly for audit purposes.
We prepare complete ASC 842 and IFRS 16 disclosures — lease maturity analyses, weighted-average lease terms and discount rates, variable lease expense, and qualitative descriptions — in the exact format your auditors expect.
Adopting a new lease standard for the first time? We guide you through the full transition — selecting practical expedients, determining the transition method, and setting up opening balances accurately.
Multinational businesses must maintain separate processes for each framework. We run both in parallel — handling the different lessee models, income statement impacts, and disclosure requirements simultaneously, without confusion or duplication. This is a genuine differentiator for US-headquartered companies with international subsidiaries.
Public sector organizations and nonprofits face a distinct set of lease accounting obligations under GASB 87. We apply GASB 87's single-model approach, recognize right-to-use lease assets and lease liabilities, and prepare the required disclosures — so government entities and nonprofits stay fully compliant.
We Work in Your Systems — No Disruption to Your Workflow
You don’t need to change your accounting software to work with us. We operate within your existing platforms and, where relevant, within leading lease accounting software tools:
Lease Accounting Software
LeaseQuery, CoStar, Nakisa, LeaseAccelerator — we can operate within your existing tool or advise on the right fit for your portfolio.
AI-Assisted Review
We combine automation-driven consistency with specialist human review — delivering speed without sacrificing the judgment that complex leases require.
ERP & Accounting Platforms
QuickBooks, NetSuite, Sage, Microsoft Dynamics, and others — no forced migration, no disruption to existing workflows.
Secure Data Transfer
SOC-2 compliant infrastructure, bank-grade encryption, and MFA access controls. Your financial data is never shared beyond the dedicated team assigned to your account.
Flexible Engagement Models To
Meet Your Business Needs
The KnowVisory Advantage
Deep expertise in ASC 842 (US GAAP), IFRS 16 (international), and GASB 87 (government entities) — and the ability to handle dual-standard reporting across all three simultaneously.
Every ROU calculation, IBR determination, modification memo, and disclosure schedule is documented — reducing review time and eliminating restatement risk.
We track lease renewal and termination option dates, flagging issues before they become audit findings, covenant breaches, or restatement events.
Five leases or five hundred — our team scales with your lease portfolio without adding overhead or software costs on your end.
We help you quantify and communicate the balance sheet impact of ASC 842 adoption to lenders, so ratio changes are understood — not flagged as financial deterioration.
We work as a true extension of your finance department, providing full visibility into our processes and outputs, and responding directly to auditor queries during fieldwork.
Take Lease Accounting Off Your Plate
FAQs
What is ASC 842 and does it apply to my business?
ASC 842 is the US GAAP lease accounting standard issued by FASB that requires companies to recognize nearly all leases longer than 12 months on the balance sheet as a Right-of-Use (ROU) asset and a corresponding lease liability. It applies to all entities reporting under US GAAP — including private companies, public companies, and nonprofits. If your business has an office lease, equipment lease, vehicle lease, or any contract containing an identified asset you control, ASC 842 very likely applies to you.
How does ASC 842 affect our debt covenants and banking relationships?
ASC 842 increases both assets and liabilities on your balance sheet, which can shift leverage ratios, current ratios, and other metrics your lenders monitor. For companies with active loan covenants, we recommend a covenant impact assessment before adoption. We work with your finance team and lenders to explain what has changed, why, and to ensure covenant compliance isn't inadvertently triggered by a standards change rather than an actual deterioration in financial health.
What is the difference between ASC 842 and IFRS 16?
Both standards require most leases to be recognized on the balance sheet. The key difference is the lessee model: ASC 842 retains a two-classification system (operating leases and finance leases) with different income statement treatments for each. IFRS 16 uses a single model where nearly all leases are treated like a finance lease — resulting in a front-loaded expense pattern and typically higher EBITDA. IFRS 16 also allows a low-value asset exemption (around $5,000) that ASC 842 does not specify.
How do you determine the right discount rate for our leases?
Yes, we do. Once your books are accurate and organized, we can provide monthly bookkeeping and reporting services to maintain complete financial accuracy.
What happens when a lease is modified or renewed?
A lease modification — any change in terms not part of the original agreement, including extensions, reductions, or changes in scope — triggers a reassessment and remeasurement of both the lease liability and the ROU asset as of the modification date. The new liability is calculated using updated payment schedules and, where appropriate, a revised discount rate. We handle the full remeasurement process and update all schedules and journal entries accordingly.
What disclosures are required under ASC 842 and IFRS 16?
Both standards require significant qualitative and quantitative disclosures. Under ASC 842, these include: a maturity analysis of undiscounted lease payments, weighted-average remaining lease terms, weighted-average discount rates, variable lease expense, sublease income, and qualitative descriptions of lease terms and options. IFRS 16 additionally requires disclosure of ROU asset additions and low-value lease expense. We prepare all required disclosures as part of our standard service.
Do I need to switch accounting software to work with you?
No. We work within your existing systems — whether that's QuickBooks, NetSuite, Sage, or another platform — and can also operate within dedicated lease accounting software such as LeaseQuery, CoStar, or Nakisa. If you don't have a lease-specific tool and would benefit from one, we can advise on the right fit for your portfolio size and complexity.
Can you work alongside our existing CPA or external auditors?
Absolutely — and we're set up to make the collaboration as smooth as possible. We prepare workpapers, amortization schedules, and disclosures in formats your auditors already expect, and we're available to respond directly to auditor queries during fieldwork.
How quickly can you onboard and how do we get started?
Most engagements begin with a free discovery call to understand your current lease portfolio, existing processes, and compliance status. We typically complete initial lease abstraction and portfolio setup within 2–4 weeks depending on portfolio size. For businesses transitioning to ASC 842 for the first time, we guide you through adoption methodology, practical expedient elections, and opening balance calculations before moving into the ongoing monthly cadence.
Is my financial data secure when shared with your team?
Data security is non-negotiable. Our technology infrastructure is SOC-2 compliant, and all data transfer uses bank-grade encryption with multi-factor access controls. We work within your preferred collaboration tools where possible, and every engagement includes a formal data handling agreement. Your financial data is never shared beyond the dedicated team assigned to your account.