In order to comply with ASC 842, the client needed to abstract data from original lease contracts, as they did not have any centralized lease management program in place. Client needed to identify all asset owners across all locations within their organization. All leases needed to be gathered into a central depository and inventoried for completeness.
Once leases were identified, all essential lease data needed to be abstracted and entered into a propriety workbook for their selected lease accounting software tool. A major challenge for this project was the lack of internal staff to perform the extensive work needed for identifying and abstracting approximately 350 leases within their diverse portfolio including equipment, copier, fleet, machinery and a large number of real estate leases.
Vaco assisted the client in identifying leases throughout their organization and explain the complexity of portfolio. Vaco created a detailed inventory of all leases including an assessment of potential embedded leases and then proceeded to abstract the 100 key data elements required by their software tool from all leases. A standard element of Vaco’s process is to work with the client regarding decisions on reporting complex elements of the leases, including but not limited to step payments, deferred rent, renewal options, incentives, OPEX, end of term dates. Vaco created a file to track all decisions made on each lease which can be used by the external auditors.
Vaco provided guidance and training to the Client’s staff on how to abstract future leases, compile key data elements for ease of upload to lease accounting software tool and apply the ASC 842 lease accounting standard to key decisions made on future leases.
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