Artificial Intelligence (AI): The simulation of human intelligence processes by machines to improve their productivity and performance, especially computer systems. Three primary cognitive skills are focused on by AI programming for machines: learning, reasoning and self-correction. Data plays a significant role in AI as it must constantly be fed fresh data in order to create rules for how to turn this into actionable insights for the program users.
Capital Lease: A contract that entitles a lessee to the temporary use of an asset. The lessor finances the leased asset and the rights of ownership are transferred to the lessee. For accounting purposes, a capital lease has the economic characteristics of asset ownership. If the lease contract has specific requirements, this kind of lease requires a lessee to book liabilities and assets associated with the lease.
Common Area Maintenance (CAM): Fees paid by the tenant/lessee to the landlord/lessor for the overhead and operating expenses for common areas. Common areas covered by these fees include, but are not limited to, building security, parking lot maintenance, landscaping, and common area lighting.
Coworking: A popular alternative to the traditional office workspace, coworking is when a group of workers from different companies share a neutral space and work independently or collaboratively. Companies sometimes use coworking facilities to provide office space when they have more than the normal number of employees working at any given time, or if they have employees working on a special project and want them to work outside the normal office environment.
Embedded Leases: A lease agreement that is embedded within a contract. Due to the lease being embedded in another contract, these arrangements have historically not been treated as leases in the past. However, the new lease FASB ASC 842 and IFRS 16 accounting standards require the identification of embedded leases and alter how they are reported on corporate balance sheets. Per ASC 842 guidelines, there are two criteria for a contract to contain an embedded lease: the contract must involve an identified asset, and the contract must convey the right to control the use of the identified asset.
Employee Engagement: The intricate nature of the relationship between an organization and its employees can be understood through quantitative and qualitative data, which then yields data about how enthusiastic, or "engaged", employees are with their work. Studies have demonstrated a strong correlation between employee engagement and workspace design and functionality.
Equipment Leases: The use of machinery or other equipment on a rental basis. Ownership rests in the hands of the lessor, while the lessee uses the equipment for the time amount allotted in the lease. An example of an equipment lease would be a restaurant leasing ovens and delivery vans from a restaurant supply company. Per ASC 842, equipment leases with a term greater than 12 months must now be accounted for on an organization's balance sheets.
Facility Management: The coordination of an organization's physical workspace with its people, work, and goals. Responsibilities that fall under facility management include information systems, space planning, property management, janitorial services, accounting, and other support duties. Facility management ensures that spaces are safe, comfortable, productive and sustainable for the people and organizations that utilize them.
FAS 13: Developed by the Financial Accounting Standards Board (FASB) to regulate lease classifications for GAAP and tax reporting purposes, FAS 13 is a complex set of rules and regulations which submits lease data to calculations aimed at answering the following questions.
If any one of the following four tests is met, the lease is capital:
1) The lease conveys ownership to the lessee at the end of the lease term;
2) The assert can be purchased at a bargain price at the end of the lease term.
3) The term of the lease is 75% or more of the economic life of the asset.
4) Using the lessee's incremental borrowing rate, the present value of the rents is 90% or more of the value of the asset.
FASB Topic 840: Prior to the implementation of the Financial Accounting Standards Board's (FASB) new ASC 842 lease accounting rules and regulations, ASC 840 was the previous governing standard used by public and private companies under the US Generally Accepted Accounting Principles (US GAAP).
FASB Topic 842: Replacing the previous US GAAP leasing standard ASC 840, Accounting Standards Codification Topic 842 - also known as ASC 842 - is the new lease accounting standard published by the Financial Accounting Standards Board (FASB). One of the main purposes of the new standard is to close an accounting loophole in ASC 840, off balance sheet accounting. While the deadline for public companies to become compliant was December 15, 2018, private companies have until December 15, 2021, to implement the standard.
Finance Lease (Capital Lease): A commonly used alternative to borrowing, a Finance Lease is an agreement between the lessor and the lessee whereby the lessor purchases the asset and transfers a majority of all rights, rewards and risks to the lessee against a periodically fixed rental.
IFRS 16: An International Financial Reporting Standard endorsed by the International Accounting Standards Board providing guidance on lease accounting and was developed in collaboration with FASB. Like FASB ASC 842, IFRS impacts how organizations classify and report their leases.
Integrated Workplace Management Systems (IWMS): A software platform that helps an organization manage its real estate portfolio, facilities assets, and infrastructure. When combined with advanced technology like AI and machine learning, IWMS software can quickly achieve operational improvements and ROI.
Lease Accounting: How a company organizes and maintains all its leases and accounts for them on their balance sheets. FASB implemented ASC 842 to both clarify and simplify the lease accounting process for private and public companies. The new standards are expected to have a significant impact on organizations' balance sheets. The two most common types of leases found in lease accounting are operating and capital leases.
Lease Accounting Changes: Financial Accounting Standards Board (FASB) has given private companies and nonprofits in the U.S. until Dec. 15, 2021 to begin treating their operating leases as liabilities on their balance sheets. For public companies, the new ASC 842 standards went into effect Dec. 15, 2018.
Lease Administration: An essential part of the accounting, administrative, and legal requirements for a company's real estate portfolio, lease administration manages the day-to-day operational requirements of managing a lease portfolio, including management of key terms, dates and clauses and paying rent for the facilities leased by an organization.
Lease Management: The professional discipline that involves ensuring that all financial transactions related to leases, such as rent, sublease payments, percent rent, common area maintenance (CAM) charges and real estate taxes, are tracked and processed accurately, and overseeing all solutions put in place to deal with such Items.
Leasehold Improvements: The enhancements made to a leased space that are paid for by either the landlord or a tenant. When an organization signs a lease, deciding who will pay for leasehold improvements is usually one of the many negotiating points. An example of a leasehold improvement would be a tenant requesting electrical and plumbing additions, but it can also involve heavy construction needs like adding offices.
Machine Learning: An application of artificial intelligence (AI) and a method of data analysis that allows systems to improve and learn without explicit programming to do so. Machine learning is primarily applied to computer programs so that they can locate meaningful patterns in massive amounts of data, and learn from it to the benefit of the user.
Move Management: Moving one or more employees from one area to another, or in and out of your organization's office space, utilizing a software that maximizes efficiency of available space and plans entire moves in one centralized system, thereby reducing costs and providing increased visibility.
Operating Lease: the rental of an asset from a lessor for a period of time, but that does not transfer ownership of the asset to the lessee, is an operating lease. During the rental period, the lessee typically has unrestricted access to the asset and is responsible for all maintenance.
If a lease is identified as an operating lease by the lessee, the following should be recognized by the lessee for the duration of the lease:
Impairments of the right-of-use asset Any variable lease payment that were not originally included in the lease liability The lease cost of each period, where the total cost of the lease is apportioned over the entire term of the lease.
Real Estate Leases: an agreement that sets out the rights and obligations of the lessor/landlord and the lessee/tenant. If the lease contains no restrictions on use, the tenant can normally utilize the property for any lawful purpose. In retail, it is common to lease the property on which a restaurant or retail shop will be located. There are three categories of real estate leases: Gross Lease/Full Service Lease, net lease, and modified gross lease.
Real Estate Sales Forecasting: Traditional sales forecasting involves using past performance to inform future performance. Those rear-view mirror approaches to forecasting lack the ability to consider complex, non-linear relationships, or of updating rapidly to reflect new and refreshed data. New techniques that leverage stacked artificial intelligence and machine learning are able to discover new drivers of performance and improve model accuracy.
Space Optimization: identifying real estate properties that have too much or too little space and then moving the operations and assets within those properties to other locations that offers more suitable space, thus optimizing workspace costs, productivity, and efficiency. Ideally, the user of a space optimization solution can specify parameters for the aforementioned factors depending on their organization's goals.
Space Utilization: measuring how space is being used by your organization and its employees. Automated calculations look at how full the space is compared to its max capacity, and the amount of time the space is used compared to its availability. Space utilization software is becoming an increasingly population solution used by facility planners to optimize space, while retail-focused space management focuses on product placements within stores.
Tenant Allowance: Also referred to as tenant improvement allowances (TIAs), this is the amount a landlord/lessor is willing to spend to renovate a rented space per the request of the renter/lessee and is typically decided upon during lease negotiations.
Wayfinding: space optimization and space utilization are enhanced when a workspace is carefully designed using wayfinding technology. This design process creates an ideal layout for a certain space which allows people within the space to reach the desired location quickly and easily.