If your organization manages a large lease portfolio, you already know that ASC 842 and IFRS 16 changed the game. Most leases now live on the balance sheet, the calculations are more complex than they used to be, and the disclosure requirements don’t leave much room for error. For companies still tracking this in spreadsheets, the margin for mistakes is significant.

Lease accounting software exists to close that gap. But to understand what it actually does, it helps to start with what makes operating and finance leases different in the first place.

Operating Leases vs. Finance Leases: What’s at Stake

The distinction comes down to how closely a lease resembles ownership. An operating lease functions more like a rental. The lessee records a single lease expense on a straight-line basis over the lease term. Under ASC 842, a right-of-use asset and corresponding liability still appear on the balance sheet, but the income statement treatment stays relatively simple.

A finance lease reflects a purchase-like arrangement. The leased asset is depreciated over its useful life, and the lease liability is unwound using the effective interest method. That means expenses are front-loaded: interest charges are higher in early periods and taper off as the principal balance decreases.

The classification matters because it affects how your financial statements look to lenders, auditors and investors. Getting it wrong or managing it manually across dozens or hundreds of leases creates real risk.

What Lease Accounting Software Does Differently

Software applies the classification criteria from ASC 842 and IFRS 16 automatically: ownership transfer, purchase options, lease term relative to asset life and present value of payments. Once a lease is classified, the system applies the correct accounting model from day one. For portfolios with mixed lease types, this consistency is difficult to replicate manually.

Accurate Calculations for Both Lease Types

For operating leases, the software calculates the right-of-use asset and lease liability at commencement, then amortizes the asset while maintaining the straight-line expense pattern the standards require.

For finance leases, it separates each payment into interest and principal components, depreciates the asset on the correct schedule and updates the liability balance accordingly. The calculations run automatically at each reporting period, which matters when you’re managing lease modifications, remeasurements or changes in discount rates.

Reporting and Disclosure at Scale

ASC 842 and IFRS 16 require detailed disclosures: maturity analyses, weighted-average discount rates, variable lease expense breakdowns and more. Pulling this together manually for audit is time-consuming and error prone. Lease accounting software generates these reports in real time and supports scenario analysis so finance teams can model the impact of lease modifications before they’re finalized.

Integration With Your General Ledger

Most enterprise lease accounting platforms connect directly with ERP systems, pushing journal entries into the general ledger without duplicate data entry. For organizations where lease data has historically lived outside the core financial system, this integration is often where the biggest efficiency gains show up.

Staying Current as Standards Evolve

ASC 842 and IFRS 16 are not static. Interpretive guidance continues to develop, and organizations operating across jurisdictions face additional complexity. Software vendors update their platforms as guidance changes, which means your accounting treatment stays current without requiring your team to parse every new pronouncement.

A Practical Starting Point

For organizations evaluating lease accounting software, the right place to start is your current portfolio. How many leases do you manage? What mix of operating and finance leases do you carry? Where are the manual touchpoints that create the most risk today?

Yardi Corom is built for CRE tenants managing exactly this kind of complexity. It handles both lease types under ASC 842, IFRS 16 and GASB standards, centralizes lease and sublease data and integrates with your existing financial systems. If you’re ready to move beyond spreadsheets, visit our website or schedule a meeting with the Corom team.