Functionality added to the Yardi Voyager® Commercial property management and accounting platform complies with upcoming new accounting standards for commercial property management set by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Yardi Voyager supports FASB-required operating and finance leases and IASB-mandated finance leases.
“Yardi fully understands the requirements set by FASB and IASB and is helping our clients adopt the mandatory new standards,” said Terri Dowen, senior vice president of sales for Yardi.
The FASB/IASB standards are optional now, but starting in 2019, FASB and IASB will require recognition of all lease transactions on a lessee’s balance sheet. Previously only finance leases (purchase agreements) appeared as liabilities; property management companies were not required to disclose long-term liabilities associated with a lessee’s leasing activities.
To account for these liabilities, lessees will need to determine the net present value (NPV) of all future leasing obligations as of a certain transition date and given a certain discount rate. The liability on the balance sheet will equal the NPV of the future lease payments. The offsetting right-of-use asset will equal the NPV of future lease payments, adjusted for initial direct costs and carryforward.
New features in Yardi Voyager help tenants meet the new standards by allowing:
- Calculation of the net present value of lease payments using a discount rate
- Recognition of a liability equal to the calculated present value and an asset equal to the present value plus adjustments
- Amortization of the lease asset value and lease liability over the life of the lease
- Generation of all required general ledger accounting entries
- A full reporting suite including prior year comparisons and compliance reports