Among the many data points for lease accounting compliance and ongoing lease management are the annual percentage yield (APY) and daily rate calculations.
What is annual percentage yield for lease accounting
The annual percentage yield (APY) is the effective annual rate of return calculated with compounding interest. APY is similar to the annual percentage rate (APR), which is used for loans and can include all borrowing costs. APY does not consider fees and other costs, simply compounding periods.
What are daily rate calculations for lease accounting
Daily rate calculations assume a consistent rate throughout the year, and provide insight on how the cost of a lease can be broken into specific time period, such as a day, week, month or irregular time period. For example, this calculation provides insight on correct rates for prorating a lease for a partial (irregular) time period, empowering negotiators with the information needed to get the best move-in and move-out dates and prorated rent rates. A lease accounting software solution capable of APY and daily rate calculations is an advantage when seeking software solutions for lease accounting compliance. The new rules for ASC 842 lease accounting go beyond real estate leases and include any leased assets with terms longer than 12 months, which must be reported on the balance sheet to fulfill compliance requirements. This includes asset leases such as manufacturing equipment, fleets and office equipment. The volume and complexity of calculations needed for accurate reporting and audit trails under the new guidance makes lease accounting software a sound investment. Learn more about CoStar’s lease management software that consolidates all lease types into one battle-tested and proven solution. Reviewed and vetted by highly respected CPAs and accounting firms, CoStar lease management software has the extensive functionality needed to manage and report on real estate, equipment and other leases for new lease accounting compliance with both FASB and ISAB standards, including current ASC 840, 842 and IFRS standards.