Updated August 19, 2026

How Manufacturers Can Simplify Lease Accounting Across Equipment, Facilities and Locations

Manufacturers often manage leases across equipment, facilities, vehicles and specialized assets, sometimes across many locations or business units. That makes lease accounting harder to track, especially when data sits with different teams.

For finance and accounting teams, simplifying lease accounting starts with understanding the biggest challenges, knowing what to look for in software and choosing a platform that can centralize data, support compliance and reduce manual work.

Why lease accounting is challenging for manufacturers

Manufacturers face lease accounting challenges that go beyond standard real estate lease tracking. Their portfolios often include high volumes of equipment leases, embedded leases, location-specific agreements and frequent lease changes tied to production needs.

That makes it harder for finance teams to maintain accurate records, meet compliance requirements and prepare audit-ready reporting without a centralized system.

High volumes of equipment and real estate leases

The first step to compliance is identifying all the lease agreements in an organization. For manufacturers, that can be difficult because leases may be spread across equipment, facilities, warehouses, distribution centers and corporate locations.

A manufacturing lease portfolio may include:

• Production machinery
• Forklifts and material handling equipment
• Trucks, trailers and fleet assets
• Security equipment
• Warehouse and logistics equipment
• Manufacturing plants
• Distribution centers
• Office space
• Specialized equipment used at specific facilities

The challenge is not just the number of leases. It is also the variety of assets, contract types, locations and internal owners involved. Equipment leases may be managed by procurement or operations, while real estate leases may sit with facilities or corporate real estate. Accounting teams still need complete and accurate information to support compliance and reporting.

Lease classification and compliance requirements

After leases are identified, finance teams need to classify and account for them correctly. Under ASC 842 compliance, leases are classified as either finance leases or operating leases.

A finance lease generally transfers substantially all the risks and rewards of ownership to the lessee. An operating lease does not transfer substantially all ownership-related risks and rewards, but it still creates reporting requirements under ASC 842.

For manufacturers, classification can become more complex when teams are managing both real estate and equipment leases across many entities, facilities or regions. A missed lease, incorrect classification or outdated assumption can affect right-of-use asset calculations, lease liability schedules, disclosures and financial reporting.

Embedded leases in service, logistics and equipment contracts

Manufacturers also need to evaluate contracts that may contain embedded leases. ASC 842 and IFRS 16 include the concept of an embedded lease that may exist within a broader service, logistics, fulfillment, IT, warehousing or equipment agreement.

An embedded lease may exist when a contract gives the company the right to control the use of an identified asset for a period of time. In manufacturing, that could involve dedicated equipment, specialized storage space, shared distribution assets or facility-related equipment included within a service agreement.

“Basically, if an asset is obtained for company use outside of the fixed asset procurement process, the accounting team should evaluate the contract for potential lease treatment,” says Matt Waters, CPA, Director of Lease Accounting and Sustainability at CoStar Real Estate Manager.

“It’s important for companies to set accounting policies around identifying and accounting for leased assets and the best practice is to discuss those policies with company auditors well in advance of the audit cycle.”

Because embedded leases can be easy to miss, manufacturers need a clear process for reviewing contracts, documenting decisions and aligning with auditors before reporting deadlines.

Frequent lease modifications, renewals and reassessments

Lease management is an ongoing effort that requires regular check-ins on existing leases. For manufacturers, lease changes may happen when the business expands production, replaces equipment, consolidates facilities, renews warehouse space or changes its distribution footprint.

Manufacturers must reassess lease accounting when there are changes to lease terms, payments, critical dates, renewal options, termination options or the scope of leased assets. These updates can affect the lease liability, right-of-use asset, amortization schedule and related reporting.

A spreadsheet-based process makes these changes harder to control. Teams may need to update assumptions, calculations, documents and journal entries across multiple files. Lease accounting software can help standardize that process and reduce the risk of missed or inconsistent updates.

Lease data spread across departments and locations

Manufacturing lease data often sits outside the accounting department. Procurement may manage equipment contracts. Operations may know when equipment is replaced or moved. Facilities may manage plant or warehouse leases. Legal may store executed agreements. Local managers may know about renewals, amendments or changes that have not yet reached corporate accounting.

Without a centralized process, finance teams may spend significant time chasing documents, confirming terms and reconciling lease details before close or audit periods. That can create delays, reporting inconsistencies and unnecessary risk.

Lease accounting software for manufacturing should help create a single source of truth for lease data across teams, locations and asset types.

Audit risk from spreadsheets and manual processes

Manufacturers with complex lease portfolios can quickly outgrow manual lease tracking. Spreadsheets may work for a small number of simple leases, but they become harder to manage as lease volume, locations, modifications and reporting requirements increase.

Manual processes can create risk in several areas:

• Incomplete lease populations
• Missed embedded leases
• Incorrect lease classifications
• Outdated payment schedules
• Formula errors
• Inconsistent assumptions
• Missing documentation
• Limited audit trails
• Delayed reporting

Lease accounting standards can also affect financial statement metrics, including liabilities, right-of-use assets and disclosures. Manufacturers need reliable data and repeatable processes to support accurate reporting and audit readiness.

What manufacturers need from lease accounting software

The right lease accounting software should help manufacturers do more than calculate compliance entries. It should support the full lease lifecycle, from lease identification and data management to accounting, reporting, reassessments and audit support.

For manufacturing companies, the most important capabilities usually include centralized lease data, automated calculations, compliance tracking, multi-location visibility, ERP integration and cross-functional lease administration.

Centralized lease data for equipment, real estate and embedded leases

Centralizing lease data in a single source of truth can improve data accuracy and accessibility. This is especially important for manufacturers with leases spread across plants, warehouses, offices, business units and departments.

A centralized lease accounting platform can help teams store and manage:

• Lease agreements
• Equipment lease details
• Real estate lease terms
• Embedded lease documentation
• Payment schedules
• Renewal and termination options
• Critical dates
• Assumptions and judgments
• Amendments and modifications
• Supporting audit documentation

When accounting, procurement, operations, facilities and real estate teams can work from consistent lease data, manufacturers are better positioned to reduce errors and improve reporting confidence.

Automated ASC 842 and IFRS 16 calculations

Utilizing specialized ASC 842 and IFRS 16 software can automate and streamline the process, ensuring accuracy and compliance. For manufacturers, automation is especially valuable because lease portfolios may include both real estate and equipment leases with different terms, payments and reassessment needs.

Lease accounting software can help automate:

• Lease classification support
• Right-of-use asset calculations
• Lease liability calculations
• Amortization schedules
• Journal entries
• Disclosure reporting
• Lease modification accounting
• Remeasurements and reassessments

Automation helps reduce manual calculations and gives accounting teams a more controlled process for managing recurring reporting requirements.

Compliance tracking and audit-ready reporting

Manufacturing finance teams need to prove how lease accounting decisions were made. That means software should support not only calculations, but also documentation, controls and audit trails.

Strong lease compliance tracking should help teams:

• Track ASC 842 and IFRS 16 requirements
• Store supporting documents
• Maintain a history of lease changes
• Document assumptions and judgments
• Monitor critical dates
• Generate consistent reports
• Support auditor requests
• Reduce reliance on disconnected spreadsheets

For manufacturers with equipment leases across multiple states or facilities, compliance tracking becomes even more important. Teams need visibility into what changed, when it changed and how it affected reporting.

Multi-location lease visibility

Manufacturers often operate across multiple plants, warehouses, distribution centers, offices and regions. Without portfolio-level visibility, accounting teams may struggle to understand total lease obligations, upcoming renewals or location-specific exposure.

Lease accounting software for multiple locations should help manufacturers view lease data by:

• Facility
• State or region
• Business unit
• Entity
• Asset type
• Lease owner
• Expiration date
• Payment obligation
• Accounting treatment

This visibility helps finance leaders understand the full lease portfolio, not just individual agreements.

ERP and finance system integration

Lease accounting does not happen in isolation. Manufacturers need lease data to connect with broader finance, accounting and reporting workflows.

Software that integrates with ERP and financial systems can help reduce duplicate data entry, improve consistency and support more efficient close processes. This is especially important for manufacturers managing multiple entities, large portfolios or complex reporting requirements.

Cross-functional lease administration

Lease accounting software should also support the people and processes around the lease portfolio. Accounting may own compliance, but accurate lease data often depends on procurement, operations, facilities, legal and real estate teams.

A centralized lease administration process can help manufacturers improve communication around new leases, renewals, amendments, terminations, equipment changes and critical dates. That helps reduce surprises during close, reporting and audit cycles.

Benefits of lease accounting software for manufacturers

For manufacturers, lease accounting software can improve more than compliance. It can help finance and accounting teams reduce manual work, strengthen controls and gain better visibility into lease obligations across the business.

Reduce manual lease accounting work

Manual lease accounting takes time, especially when teams are managing equipment leases, real estate leases, embedded leases and modifications across multiple locations.

Lease accounting software can reduce the need to maintain separate spreadsheets, manually update schedules or recreate calculations for recurring reporting periods. That gives accounting teams more time to review exceptions, support analysis and manage higher-value reporting work.

Improve compliance confidence

Manufacturers need consistent processes for lease identification, classification, calculation, reassessment and reporting. Lease accounting software can help standardize those processes and support compliance with ASC 842 and IFRS 16.

With better documentation, audit trails and reporting consistency, finance teams can respond to auditor requests more efficiently and reduce the risk of last-minute surprises.

Gain visibility into lease obligations

Manufacturing leaders need to understand upcoming lease obligations before they affect operations or financial reporting. Lease accounting software can help teams track renewals, expirations, payment changes, termination options, purchase options and other critical dates.

That visibility is especially valuable when manufacturers are planning facility changes, replacing equipment, expanding production or evaluating cost-control opportunities.

Support growth, restructuring and portfolio changes

Manufacturers often evolve through expansion, consolidation, acquisitions, facility moves or new production requirements. Each change can affect the lease portfolio.

A centralized lease accounting and administration platform can help finance teams manage those changes with better data, stronger controls and more consistent reporting.

Choosing lease accounting software for your manufacturing business

When evaluating lease accounting software for manufacturing, finance and accounting leaders should look for a solution that can support both compliance requirements and operational lease complexity.

Before selecting a platform, consider whether it can:

• Manage both equipment and real estate leases
• Support ASC 842 and IFRS 16 calculations
• Track embedded leases and supporting documentation
• Centralize lease data across locations and departments
• Support lease modifications, renewals and reassessments
• Provide compliance tracking and audit trails
• Generate consistent lease accounting reports
• Track critical dates, expirations and obligations
• Support multi-location lease visibility
• Integrate with ERP or financial reporting workflows
• Help accounting, procurement, operations, facilities and real estate teams work from the same lease data

Manufacturers should not have to choose between compliance and visibility. The right lease accounting software should help teams manage both.

How CoStar Real Estate Manager helps manufacturers

CoStar Real Estate Manager helps manufacturers manage lease accounting and lease administration in one centralized platform. For finance and accounting teams, that means better visibility into lease data, calculations, reporting and critical dates across equipment, real estate and embedded lease portfolios.

Manufacturers can use CoStar Real Estate Manager to support:

• ASC 842 and IFRS 16 lease accounting
• Centralized lease data management
• Equipment and real estate lease tracking
• Lease administration workflows
• Critical date alerts and reminders
• Lease modification and reassessment processes
• Audit-ready reporting and documentation
• ERP and financial reporting workflows
• Cross-functional visibility across finance, accounting, operations, procurement, facilities and real estate teams

By bringing lease accounting and lease administration together, CoStar Real Estate Manager helps manufacturers reduce manual work, improve compliance confidence and manage complex lease portfolios with greater control.

Learn more about how CoStar’s lease accounting software helps teams centralize lease data, streamline compliance and manage complex lease portfolios.