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Lease Accounting Split Amortization Schedules

Lease Accounting Split Amortization Schedules

Lease accounting split amortization schedules are made easy with CoStar.

Accountants need the ability to split amortization schedules into separate components to identify book tax differences in compliance with GAAP and tax accounting rules. Although many lease accounting solutions have no ability to do that, CoStar can.

Many companies split lease amortization schedules into two schedules: a main lease accounting schedule for the space itself and a separate schedule that covers other components, such as tenant improvement allowances (TIAs), purchase accounting adjustments, and cease-use adjustments. The monetary value of these components composes part of the ROU asset—per ASC 842 lease accounting rules—and are used by the Tax Accounting team for tax reporting.

Why Lease Accounting Needs Split Amortization Schedules

Below is an example of why a company needs the ability to split amortization schedules for lease accounting:

ACME rents space for $10,000 a month. The company signed the lease after the lessor agreed to a $100,000 TIA. ASC 842 rules require the TIA to be included as part of the ROU asset and to be amortized over the term of the lease. 

At the end of each year, ACME’s Tax team asks the lease accounting team for the amount of that $100,000 TIA that is currently part of the ROU asset. If the TIA is built directly into the amortization schedule and the leasing software only allows one amortization schedule per record, the accountants will need to manually create a schedule recreating the amortization of the TIA to figure out which portion of the amortization activity and ROU asset balance is related to the TIA.

Split Amortization Schedules for Lease Accounting with CoStar

Lease accounting software from CoStar provides the ability to split amortization schedules into as many schedules as needed. There could be one for TIA, one for purchase accounting adjustments, and one for cease-use adjustments. At the end of the year when company tax accountants ask to see the portion of the amortization schedules that relates to separate components, no extra work needs to be done. The Tax team can be granted access to the system to instantly run a report showing those amounts.


Lease Accounting Software with CoStar

If your existing lease accounting software is missing these essential, time-saving functions – or if you’re looking to implement the company’s first solution – get the system that can do all this and more. CoStar. CoStar is trusted and recommended by more leading accounting firms and service providers to manage and report on real estate and equipment for compliance with ASC 842 and IFRS 16 guidance. If your lease data is already in a database, upgrading is easier than you’d expect. Schedule a demonstration for your team today.