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2 Copyright ©2021 Tango. All rights reserved. FASB ASC 842 & IFRS 16 COMPLIANCE | LEASE PROCESS About Tango As the market leader in integrated workplace management system and store lifecycle management. Tango has successfully partnered with over 500 leading companies and we apply that deep knowledge and those best practices to our world-class solution. As the only true end-to-end solution on the market, we help customers find, build and manage retail and office locations in a single suite, leveraging AI and deep learning techniques. Our cloud-based SaaS and mobile solutions are utilized across more than 140 countries by concepts ranging f rom those having small footprints to large global brands with more than 40,000 locations. Tango Lease was built f rom the ground up with FASB ASC 842 and IFRS 16 compliance and has been validated by leading independent accounting firms. Our unparalleled depth of industry experience combined with our leading solution has resulted in dozens of major corporations switching to Tango for their lease administration and accounting requirements. To a smaller degree, the same can be said for the accounts receivable process for those companies who are typically a lessee, but find themselves in the role of the lessor in the context of subleases. Here again, the lease administration and accounting software calculates the pass through rent and variable expenses that will be invoiced to the subtenant and transmits on a period basis to accounts receivable, via integration, who in turn issue invoices. In some cases, this may also occur with the subletting of equipment. Lease Event Processes A lease event includes any time a modification to a lease occurs, such as whether to exercise a renewal or purchase option, at which point the lessee must reconsider certain assumptions made at the lease commencement date. At the time of a modification, the lessee must remeasure the lease liability and adjust the underlying right-of- use asset. An updated discount rate must also be applied, except in special circumstances. So, what does all that mean? It means your process will need to change whenever "a change to the terms and conditions of a contract that results in a change in scope of or the consideration for a lease". Examples include lease renewals, amendments, renegotiations, early terminations, and change in timing of payment, to name a few. To catch all lease events that require lease modifications, and therefore remeasurement, companies will need to insert process controls to trigger the assessment of a change as defined by the new regulation. Tax Processes To be clear, the new lease accounting standards will not materially impact U.S. federal taxes. Instead, tax functions will likely benefit f rom the newly available data for all leases – such as renewal options, lease terms, payment schedules, etc. – that will be required to facilitate the new lease accounting calculations. For tax departments, during the adoption of the new accounting model, it is important to review the data repository of the organization's entire lease portfolio, inclusive of renewal options, lease terms, payment schedules, etc. f rom both a financial accounting and income tax perspective. This will enable companies to effectively: ظ Identify differences between the current standard and the new standard ظ Inventory all existing leases and deferred income tax items associated with the leases ظ Assist in the computation and reconciliation of book/tax differences ظ Assess federal, state, and international tax impacts ظ Implement a process to properly characterize a lease transaction under the new standard on a go forward basis, while at the same time assessing the tax treatment of each lease transaction

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