Contents

Best Practices for Lease Accounting in IBM TRIRIGA

Important: Updates
Notes: Additional Best Practices

1. Answering "No alternative use of specialized asset to lessor at end of lease term?"

For GAAP (FASB), a new question "No alternative use of specialized asset to lessor at end of lease term?" is added to determine if the landlord will use the property that the tenant has modified.

If the Lease Classification is defined as Operating and the question is set to YES, the Lease Classification will change to Finance.
If the Lease Classification is defined as Finance and the question is set to YES, the Lease Classification remains as Finance.
If the Lease Classification is defined as Finance or Operating and the question is set to NO, the Lease Classification stays the same.

2. Answering "How will company remeasure the asset?" under IFRS

Lease accountants are required to identify how the finance schedule will be updated when reviewing the lease assumptions. For IFRS, lease accountants must choose one of the following 3 options:

At Amortized Cost: If using this option, lease accountants are required to review the lease assumptions by updating the Incremental Borrow Rate.
At FV under IAS16: If using this option, lease accountants are expected to use fair value on lease assumptions to adjust the asset value. The system recalculates the amortization of the Asset.
At FV under IAS40: TRIRIGA does not support this option in the current product and expects the lease accountants to export the generated finance schedule as a starting point to be worked offline in Microsoft Excel.

3. Cleaning up the accounting standard after upgrading to 10.5.1