November 29, 2010
Lucernex real estate finance expert Jim Duport, after completing an upgrade to our core financial engine to support the new proposed FASB / GAAP rules, discusses questions surrounding how renewal option probability will be calculated under the new FASB rules.
This is the third in a series of Blogs by Jim describing his findings during the process of developing the architecture within the core Lucernex financial engine to handle the new proposed FASB rules.
Under the proposed FASB rules tenants are required to estimate the probability of exercising their renewal taking into account past practices which includes assigning “more likely than not to occur renewal probability”. For example, assume a tenant has 30 offices with similar leases and renewed 20 of them and allowed the other 10 to lapse; then the past practice is to renew for 2/3rd of the portfolio of similar leases (66% probability of exercising). (more…)
Tags: FASB GAAP Accounting, New FASB rules, Renewal options FASB :: 1 Comment »
November 15, 2010
Lucernex real estate finance expert Jim Duport, after completing an upgrade to our core financial engine to support the new proposed FASB / GAAP rules, discusses how probability used to be used with the new FASB rules.
This is the second in a series of Blogs by Jim describing his findings during the process of developing the architecture within the core Lucernex financial engine to handle the new proposed FASB rules.
In my previous life I was a math major (actually also a high school math teacher), but, more importantly, I have a friend who is a PhD in Math. I figured if I didn’t understand the probability in the multiple examples I have seen of the new PROPOSED FASB Lease Accounting, then others might also be having issues understanding it. (more…)
Tags: corporate lease analysis, FASB accounting rules changes, FASB Lease Analysis, lease analysis software, New FASB rules, new GAAP Accounting :: 1 Comment »
November 8, 2010
Former Accountant, Lease Administration and Accounting expert and Lucernex Director of Client Services, Jim Short, discusses the high cost of waiting to upgrade your Lease Administration system.
Changes to FASB / GAAP rules are eminent. Little has changed in the last few reviews and the rules are now out for final comment. It is clear the changes reflect an enormous shift in how leaseholders will account for their leases. The biggest unanswered question seems to be whether they will go into effect in 2013 or 2014.
What we hear from retailers is that they plan to wait until the final rules are adopted before making any changes. There are a number of reasons why waiting is a very dangerous choice. (more…)
Tags: fasb impact on lease administration software, Lease Administration software, New FASB rules, risk of waiting to upgrade :: 3 Comments »
November 1, 2010
Lucernex real estate finance expert Jim Duport, after completing an upgrade to our core financial engine to support the new proposed FASB / GAAP rules, discusses an interesting finding – in certain circumstances, the new GAAP can be cheaper.
This is the first in a series of Blogs by Jim describing his findings during the process of developing the architecture within the core Lucernex financial engine to handle the new proposed FASB rules.
I started the substantial upgrade of Lx LseMod version 15, including changes to the core Lucernex financial engine, in July. After over 500 hours, it is virtually done. Since it includes a Transaction Date that can be different from the Lease Commencement Date (even exact days such as the lease starting on the 12th of the month), and Renewal Option Rent Calculations, I have been able to “test” a variety of real world scenarios under the Proposed New GAAP. Note: Lx LseMod provides for a 30-year lease term and 5 renewal options for a total of another 30 years. (more…)
Tags: FASB, FASB GAAP, GAAP, New FASB rules, New vs old FASB, new vs old GAAP :: 2 Comments »