Close & reporting
Lease accounting (ASC 842 / IFRS 16)
Office, warehouse and retail leases brought onto the balance sheet as a right-of-use asset and a lease liability under IFRS 16 as endorsed by SOCPA, with monthly amortisation tracked going forward, for a company leasing space in Riyadh, Jeddah or Dammam.
Management report
Illustrative client · August 2026
SAR
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
The lease that used to be a footnote
Under IFRS 16 as endorsed by SOCPA, most operating and finance leases now sit on the balance sheet as a right-of-use asset against a matching lease liability, rather than showing up only as a rent expense. A company with office space in Riyadh, a warehouse near Dammam's industrial zones, or retail units across Jeddah usually has several of these to bring on at once.
Building the schedule
We inventory every lease agreement, calculate the right-of-use asset and liability at an agreed discount rate, and schedule the monthly amortisation and interest expense through to the end of the term, with each lease classified as operating or finance and documented for your financial statement notes.
Not every lease needs the full treatment
A practical expedient under IFRS 16 lets short-term leases skip this treatment, and we confirm that lease by lease rather than assuming an entire portfolio of retail units and warehouse space qualifies just because most of it does.
Picking the discount rate
Where your incremental borrowing rate is known we use it directly, and where it is not, we agree a reasonable estimate with you and record the basis so it can be revisited if terms change later. A senior reviewer checks the full schedule before it reaches your fixed asset records.
Questions
Frequently asked questions: Lease accounting (ASC 842 / IFRS 16)
Does every single lease need to go on the balance sheet?
Short-term leases can often be excluded under a practical expedient in IFRS 16, confirmed lease by lease rather than assumed across a whole portfolio.
Do renewal options affect the lease liability?
Where a renewal is reasonably certain to be exercised, it is folded into the lease term used to calculate the liability.
Can a retail unit in Jeddah and a warehouse near Dammam sit in the same schedule?
Yes, each lease is inventoried and classified on its own terms regardless of city, and all feed one disclosure schedule.
Do month-to-month leases need to be on the balance sheet?
Short-term leases can often be excluded under a practical expedient available in both standards; we confirm this lease by lease.
What discount rate do you use for the lease liability?
We use your incremental borrowing rate where it is known, or a reasonable estimate agreed with you where it is not, and document the basis in the schedule.
What if our records for lease accounting (ASC 842 / IFRS 16) are not up to date?
If your records are behind, we scope a catch-up first so lease accounting (ASC 842 / IFRS 16) starts from a clean, reconciled base. That catch-up is priced and timed separately from the ongoing engagement, so you always know what each part costs.
Who reviews the work before it reaches us?
Every deliverable under lease accounting (ASC 842 / IFRS 16) is reviewed by a senior reviewer before it reaches you. You keep access to the underlying file at every stage, so nothing about the work happens somewhere you cannot see it.
Related services
- Close & reportingUS GAAP conversionBooks moved from cash basis or another framework onto US GAAP accrual accounting, with every adjustment documented so a lender, investor or auditor can follow the trail.
- Close & reportingPrepaid schedulesInsurance, software subscriptions and other costs paid up front spread across the months they actually cover, instead of hitting one month's profit and loss all at once.
Industries
- Restaurants and multi-entity franchise groupsBookkeeping for restaurant groups and franchise operators running several locations or legal entities at once.
- Real estate and property managementBookkeeping for property owners and managers tracking income, expenses and reserves at the level of each individual property.
- HospitalityBookkeeping for hotels, short-term rentals and hospitality operators reconciling booking platform payouts and occupancy-driven revenue.
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.