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　(Head Office: Chiyoda-ku, Tokyo; CEO: Osamu Hata; hereafter "WAP") announced today the addition of "Lessor/Sublease" functionality to its fixed asset management system "HUE Asset" in response to the new lease accounting standards.
　Although the impact of the new lease accounting standard is generally said to be mainly on the lessee side, it has become clear that some lessor contracts, mainly subleases, will be significantly affected. HUE Asset addresses this "dark horse" lessor/sublease impact and provides it as a standard feature so that all major companies can safely comply with the new lease accounting standards.

1. Lessor and sublessor accounting is the "dark horse" of new lease compliance.

　The new lease accounting standard finalized in September 2024 requires lessees to on-balance lease contracts that have not been recorded on their balance sheets (BS), and many companies are already taking steps to comply with the standard.
　On the other hand, the impact on the lessor side is considered to be "limited," and many companies have postponed taking action. However, as the study of accounting policies progresses, there are many cases where new finance leases are determined to be finance leases because the recognition of the underlying asset will be changed for "sublease contracts*1". In such cases, numerous changes in accounting procedures, such as calculations and journal entries based on the interest method, will occur, which will have unexpected effects, and thus the lessor/sublessor issue is said to be a "dark horse" issue.

*1: Contracts in which a company leases a property it has leased to another company

The impact is of particular concern to real estate developers and housebuilders that lease in bulk and lend to other companies, as well as companies that lend from their headquarters to their subsidiaries. Furthermore, many companies have asked WAP to support their systems, as systems that can handle lessors and sublessees are not generally sold or packaged.

2. Lessor and sublease functions have been added to HUE Asset to enhance support for new leases.

　To address these companies' issues, HUE Asset has decided to include lessor/sublease functionality as a standard feature. Based on the issues WAP has heard from various companies, this new functionality will provide a comprehensive set of functions required by major companies for sublease transactions, including linking head leases and subleases and identifying intergroup transactions, in addition to basic lessor accounting processing.

　WAP has a track record of being the fastest*2 in Japan to provide lessee lease functions and has led the way in complying with the new lease accounting standards. Leveraging this track record, WAP will be the first to provide practical functions to address the peripheral issues faced by major companies.

HUE Asset, a fixed asset management system for major corporations

About Works Applications

Works Applications was founded in 1996 as an ERP package vendor in Japan. With innovative solutions such as no-customization and free version upgrades, we have supported the growth of our customers, mainly major Japanese companies. Believing in the potential of each individual, we aim to be a "growth engine" that maximizes the value of companies and individuals, and we will continue our pursuit of turning "work" into "creation" and making "work" fun.

*2: The basis for "fastest in Japan" is based on product information, press releases, and websites of major ERP/fixed asset management system vendors in Japan that are publicly available as of October 10, 2024, and research results we have confirmed. This research is based on publicly available information and does not cover all products and services from all market participants. It also includes information from user interviews and catalogs.
*Company names, product names and service names are trademarks or registered trademarks of their respective companies.
*The information in this release is current as of the date of publication, and is subject to change or withdrawal without notice. The information contained in this release is forward-looking and subject to change without notice.