Discussion No. 1
Research and select an area where you feel a standardized Excel input form would be helpful to track the necessary data needed to meet the standard for financial reporting (you may select any area you feel is appropriate ex. leases, fixed assets, foreign exchange, etc). This form could be used by your audit clients or staff.
Once you have established the information you would like to track, create an input form in Excel based on the steps in the video. As part of your discussion explain the specific reason, related to the standard, why you selected the particular fields, the overall design of your form as it relates to helping your clients or staff meet the standard you selected, and how it would improve the preparation of financial statements and/or footnotes. Upload a copy of your Excel file with at least 5 entries for others to view and comment. Be sure to note the specific FASB standard you used so others can find it easily in the FASB Codification System (ex. ASC 908-330-25-1).
As part of your response, test the form presented by another student and discuss, if you think it provides the detail needed to meet the standard or some data could be added or eliminated.
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I feel a standardized Excel form could be helpful when dealing with leases, some companies lease the building where they are operating, or equipment. According to the Financial Accounting Standards Board (FASB) in ASC 842-10-20 (n.d.), a lease is “an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets) usually for a stated period of time.” (par. 25), therefore any leases that are over 12 months, need to be presented on the company’s balance sheet as well as the corresponding liability for the obligation of paying rent.
About the changes to the Topic 842, Leases in the Accounting Standards Update 2016-02, Anders (2018), stated that “the 2016 ASU requires lessees to recognize lease liabilities based on the present value of remaining lease payments, and requires additional disclosures by lessors and lessees; the 2018 update concerns the separation of non-lease components from lease components and the adoption date” (par. 2), therefore, the asset and liability should be measured at the beginning at the present value of the lease payments, including payments to be made in optional renewal periods, if the lessee is reasonably certain that wants to extend the lease. The present value should be determined using the level of depreciation specified in the lease (if applicable) or the annual interest cost of the lessee. The asset will be depreciated, and the liability will be reduced by lease payments. (Hladika & Valenta, 2018). The fields selected give an overall information of a lease to make easier to find which are about to expire or maybe which should be terminated.
Even if it is a simple type of form, it could improve the preparation of financial statements, due to the fact that all the leases that the company have should be keyed in and updated, to have a quickly reminder of which leases are about to end or which ones need to be renewed. Additionally, if a new employee for the accounting team is hired, they could review this form and easily know the leases that the company have that need to be supervised. Now of days accounting softwares do all the work for you, but sometimes a little cheat sheet comes handy.
