In 2010, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) announced a new lease accounting standard that would take effect in 2019 — 2020. There is a wealth of information available on the topic, but none of it was targeted at specifically helping business’s understand the impact.
Forio and CBRE teamed up to create a simple, interview-style calculator to help business users better understand the nuances of the new standards as they relate to their specific real estate leases. We created the tool to take into account many unique details of each business lease, and provide helpful reference information along the way. Users can then compare the financials under the old standard to what they will be with the new standard.
The CBRE Interactive Lease Calculator is designed to ask the user “interview-style” questions in 4 easy steps. First, they identify whether they report under U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Then it asks about the length of the primary lease term, whether the lease contains any termination and/or renewal options, and whether the termination and/or renewal options are “reasonably certain” of being exercised to effectively define the terms of the lease. The final sections allow the user to specify details of their space, any applicable recovery structure, and how their rent is structured with rental rate increases, including internal borrowing rates.
The final output is a side-by-side comparison of leases, via both visual representation and tabular data. Users can quickly edit for ‘what if’ analysis. They can also save, share, or print for future reference.