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Property Manager Compliance with IFRS 16 and ASC 842 – Update


As explained in earlier post on 2nd Aug 2016, The IASB (International Accounting
Standards Board) and FASB (Financial Accounting Standards Board) have nearly
converged accounting standards for leases. To meet these new standards for
leases, property tenants and equipment lessees are required to make
significant changes in accounting and reporting for most leases (i.e., rental
contracts) on their balance sheets as lease liabilities with corresponding
right-of-use-assets

Key Impacts on real estate entities
& accounting


US
GAAP (ASC 842)

International
GAAP (IFRS 16)

Landlord
Impact

Many
aspects of lessor accounting under the new accounting standard are similar to
existing accounting standards.

Tenant
Impact & Accounting

· Tenants are required to recognize most leases on
their balance sheets as lease liabilities with corresponding right-of-use
assets

· Requires classification of lease arrangements as
operating or finance (aka capital leases under current accounting guidance)

· Tenants are required to recognize most leases on
their balance sheets as lease liabilities with corresponding right-of-use
assets

· All lease arrangements classified as finance
leases (similar to US GAAP)

Effective
Dates

· Public companies: Annual periods beginning after
December 15, 2018 (i.e., 1 January 2019 for a calendar-year entity), and
interim periods within those years.

· All other companies: Annual periods beginning
after December 15, 2019

· Early adoption is permitted on a retrospective
basis

· All companies: Annual periods beginning on or
after January 1, 2019

· Earlier adoption permitted on retrospective
basis, provided IFRS 15, Revenue from Contracts with Customers is adopted at
the same time

 Product Strategy

To meet these new requirements for tenants, we
intend to enhance existing functionality to capitalize right of use assets with
corresponding liabilities, and to generate results to account for associated
interest expense and amortization or depreciation of the asset and liability
accounts. The enhancements are planned to include the ability to report
comparative results for the two years preceding the effective dates.

The enhancements will be applied to 12.1.3 and
12.2.

For more information on the high level changes
that are planned now and how Oracle Property Manager product strategy is
planning to meet these requirements, refer to the community posting PN Statement of Direction 5-July-16
as well as Document
2162811.1

Join the discussion

Comments ( 3 )
  • Krishna Friday, October 28, 2016

    Hi

    So how does the change can be reflected in Oracle R12.2

    Is there any patch available from Oracle or do we need to handle through any SLA modifications


  • guest Friday, October 28, 2016

    Hi Krishna

    Yes once the ER is implemented, a mostly a patch will be released for 12.2 version to incorporate those changes.

    Regards


  • Bobby Tuesday, October 24, 2017
    So when is the patch be available?
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