{"id":3021,"date":"2021-01-01T10:00:00","date_gmt":"2021-01-01T14:00:00","guid":{"rendered":"https:\/\/visuallease.com\/?p=3021"},"modified":"2025-11-24T03:14:31","modified_gmt":"2025-11-24T07:14:31","slug":"2020-guide-to-ifrs-16-lease-accounting-software","status":"publish","type":"post","link":"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/","title":{"rendered":"2021 Guide to IFRS Compliant Lease Accounting Software"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/#How_are_IFRS_16_leases_calculated\" >How are IFRS 16 leases calculated?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/#What_is_IFRS_Compliant_Accounting_Software\" >What is IFRS Compliant Accounting Software?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/#IFRS_16_Software_Key_Features_Benefits\" >IFRS 16 Software Key Features &amp; Benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/#Does_IFRS_16_apply_to_software_licenses\" >Does IFRS 16 apply to software licenses?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/visuallease.com\/2020-guide-to-ifrs-16-lease-accounting-software\/#IFRS_16_software_can_ease_the_transition\" >IFRS 16 software can ease the transition<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400\">Changes in accounting standards have made lease accounting more difficult. Adopting <a href=\"https:\/\/visuallease.com\/compliance\/ifrs-16\/\">IFRS 16 lease accounting<\/a>, for example, has made compliance cumbersome as it involves adjusting to new policies, systems and processes. But with <b>IFRS lease accounting software<\/b>, a firm\u2019s compliance with new standards can be a breeze.<\/span><\/p>\n<p><span style=\"font-weight: 400\">While the January 1, 2019 deadline for IFRS 16 compliance has passed, research shows that many firms are still lagging in their transition to the new standard. This is probably because some are still practicing IFRS 16 illustrative examples using Excel sheets, while others are using accounting software that doesn\u2019t deliver on its promises.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If compliance with the new standard remains a problem, then it\u2019s time to find a reliable software solution. Here\u2019s a basic guide to the new standard and how a reliable IFRS 16 software solution can help your business.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_are_IFRS_16_leases_calculated\"><\/span><span style=\"font-weight: 400\">How are IFRS 16 leases calculated?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400\">Under IFRS 16, lessees must recognize their <\/span><b>assets and liabilities<\/b><span style=\"font-weight: 400\"> coming from a lease. After all, the standard\u2019s goal is to report information that offers a basis for companies to determine the timing, amount and uncertainty of cash flows arising from rentals, as well as a faithful representation of lease transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400\">IFRS 16 mandates that lessees recognize the assets and liabilities for all <\/span><b>short-term rentals<\/b><span style=\"font-weight: 400\">, or those with a lease term of 12 months or below, except in cases where the asset value is low. Lessees must also recognize the right-of-use asset that represents the underlying rented asset, as well as the lease liability that represents the obligation to make rental payments.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_IFRS_Compliant_Accounting_Software\"><\/span><span style=\"font-weight: 400\">What is IFRS Compliant Accounting Software?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400\"><a href=\"https:\/\/visuallease.com\/solutions\/lease-accounting-software\/\" target=\"_blank\" rel=\"noopener\">Lease accounting software<\/a> is an application designed specially to automate the report processing for the new standards \u2014 GASB 87, <a href=\"https:\/\/visuallease.com\/asc-842-summary\/\" target=\"_blank\" rel=\"noopener\">ASC 842<\/a>, SFFAS 54 and IFRS 16. The software gathers information about a rental contract, such as payment frequencies, rent formulas and discount rates, then does the necessary calculations to generate the required journal entries for financial statements.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_Software_Key_Features_Benefits\"><\/span><span style=\"font-weight: 400\">IFRS 16 Software Key Features &amp; Benefits<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400\">There are plenty of software solutions promising quick and easy compliance with the IFRS 16 standard. However, since not all software is created equal, businesses should look for the following key features.<\/span><\/p>\n<p><b>Configured to meet All IFRS 16 disclosure requirements<\/b><\/p>\n<p><span style=\"font-weight: 400\">The new standard contains plenty of changes when it comes to disclosures. There are now more disclosures needed, including the total outflow of leases, right-of-use assets and interest expenses for lease liabilities. <\/span><\/p>\n<p><span style=\"font-weight: 400\">A reliable IFRS 16 software solution should have the proper configurations to generate all the disclosure reports the business needs.<\/span><\/p>\n<p><b>Data intelligence<\/b><\/p>\n<p><span style=\"font-weight: 400\">The accounting software should be designed to handle all the complexities of IFRS 16 to ensure accuracy and save the business a lot of time. Some of the data features that the software should have include borrowing <\/span><b>rate charts<\/b><span style=\"font-weight: 400\">, <\/span><b>practical expedient elections<\/b><span style=\"font-weight: 400\"> and <\/span><b>useful life chart<\/b><strong>s.<\/strong><\/p>\n<p><b>Full support for all internal controls<\/b><\/p>\n<p><span style=\"font-weight: 400\">Reflecting the bulk of the lease contracts into the balance sheets highlights the company\u2019s lease accounting controls. It is essential, then, to opt for IFRS 16 software that can provide support to internal controls.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">This means choosing a software solution offering features like <\/span><b>data entry validation<\/b><span style=\"font-weight: 400\"> and <\/span><b>role-based access<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><b>Cloud-Based SaaS system<\/b><\/p>\n<p><span style=\"font-weight: 400\">A centralized location and availability of data are some of the primary benefits of having a SaaS tool for lease accounting.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">A SaaS system allows the accounting department staff to access lease documents anywhere as long the person has access to the internet. A centralized location and easily accessible information save companies time and space, eliminating the need for hordes of files in hard copies.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">In addition, users in accounting and other departments can have custom access levels for lease contract data. This feature allows the company to provide access to those who need it without compromising data security.\u00a0<\/span><\/p>\n<p><b>Automated critical alerts<\/b><\/p>\n<p><span style=\"font-weight: 400\">Missed, late or over payment of leases can happen if companies stick to the manual way of doing things. Fortunately, these can all be avoided with a stable IFRS 16 software solution. Automated alerts that are sent via email every time an important date is coming up prevents missed or late lease payments.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Does_IFRS_16_apply_to_software_licenses\"><\/span><span style=\"font-weight: 400\">Does IFRS 16 apply to software licenses?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400\">There are also software leases in lease accounting, entertaining the right-to-use for the software once the lease contract starts. The software should be treated as an intangible asset in compliance with IAS 38. However, accounting for software leases is outside the scope of IFRS 16.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_software_can_ease_the_transition\"><\/span><span style=\"font-weight: 400\">IFRS 16 software can ease the transition<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400\">Transitioning to new accounting standards, including IFRS 16, will always be complicated. Businesses would do well to invest in a reliable lease accounting software to manage the changes and help the accounting department adopt IFRS 16.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">At Visual Lease, we ensure a smooth transition to the new standards with our <\/span><a href=\"https:\/\/visuallease.com\/solutions\/lease-accounting-software\/\" rel=\"canonical\"><span style=\"font-weight: 400\">reliable lease accounting software<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Changes in accounting standards have made lease accounting more difficult. Adopting IFRS 16 lease accounting, for example, has made compliance cumbersome as it involves adjusting to new policies, systems and&#8230;<\/p>\n","protected":false},"author":2,"featured_media":5071,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[170,109,184],"tags":[],"company_size":[],"company_portfolio_size":[],"company_industry":[],"case_study_topic":[],"class_list":["post-3021","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lease-accounting","category-lease-administration","category-lease-management"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/3021","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/comments?post=3021"}],"version-history":[{"count":0,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/posts\/3021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media\/5071"}],"wp:attachment":[{"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/media?parent=3021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/categories?post=3021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/tags?post=3021"},{"taxonomy":"company_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_size?post=3021"},{"taxonomy":"company_portfolio_size","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_portfolio_size?post=3021"},{"taxonomy":"company_industry","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/company_industry?post=3021"},{"taxonomy":"case_study_topic","embeddable":true,"href":"https:\/\/visuallease.com\/wp-json\/wp\/v2\/case_study_topic?post=3021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}