In the robotics industry, precision matters—not just in machine functionality, but in financial reporting too. As companies scale their development of autonomous systems, robotic arms, drones, and industrial automation, the capital required to operate efficiently often includes a mix of owned and leased equipment.
From labs to factories, robotics firms rely heavily on leased assets: advanced testing machinery, production lines, even office tech. But accounting for these leases is no longer a simple footnote in financial statements. Thanks to updates in lease accounting standards, particularly ASC 842 leases, companies must now take a more detailed and transparent approach.
Here’s what robotics companies need to understand about lease accounting—and how to stay compliant while managing a growing portfolio of technical assets.
Why Lease Accounting Matters in Robotics
In the past, only capital leases appeared on the balance sheet. Operating leases were often hidden in the footnotes of financial statements. That changed with ASC 842, the Financial Accounting Standards Board’s (FASB) updated lease accounting standard, which requires most leases to be recorded as right-of-use (ROU) assets and lease liabilities.
This shift affects robotics companies in particular because:
- They often lease specialized and expensive equipment.
- Long development cycles mean leases may be renewed or extended.
- Project-based or prototype-heavy businesses need granular asset tracking.
- Transparency in financials is critical to investors and regulators.
According to a Deloitte survey, 75% of companies reported a moderate to significant effort in implementing ASC 842, especially those in manufacturing and tech sectors.
Identify and Categorize All Lease Types
The first step is to inventory and categorize all leases. For a robotics company, this may include:
- Machinery (e.g., robotic arms, testing rigs, CNC machines)
- Lab equipment
- Vehicles (delivery drones, service robots)
- Office space and coworking labs
- Software licenses with embedded leases
- IT equipment (servers, networking hardware)
Each lease needs to be classified as either:
- Operating lease – Treated as a right-of-use asset with straight-line expense recognition.
- Finance lease – Similar to a capital lease under the old standards, with interest and amortization split in reporting.
This classification affects how the asset appears on the balance sheet and how expenses hit the income statement.
Key Data to Track for Each Lease
To stay compliant, companies must track detailed information on every lease. Here’s a list of what needs to be captured and updated regularly:
- Lease term (including renewal or termination options)
- Lease payment schedule
- Discount rate used to calculate present value
- Fair market value of the asset
- Lease incentives or penalties
- Modifications and amendments to original lease terms
Using spreadsheets to manage this volume of data is risky, especially when scaling across facilities or international offices. Most companies now turn to lease management software that integrates directly with accounting systems.
Accounting Journal Entries for ASC 842
Under ASC 842, both finance and operating leases go on the balance sheet. Here’s how a simplified accounting treatment might look for a leased robotic testing machine:
At lease commencement:
- Debit: Right-of-Use Asset
- Credit: Lease Liability (based on present value of future lease payments)
Each period:
- Operating lease: Recognize lease expense on a straight-line basis
- Finance lease: Recognize interest on liability and amortization on asset
Robotics firms must apply this across every lease, recalculating when terms change or assets are returned early.
Build Systems to Support Compliance
Given the complexity of equipment-based leases in robotics, relying on manual methods won’t scale. It’s crucial to have the right tech and internal controls in place.
What helps:
- Centralized lease management software
- Integration with your general ledger and ERP systems
- Documented internal procedures for lease review and updates
- A cross-functional team (finance, legal, procurement) to handle lease data
Regular audits of lease information can also reduce errors and improve readiness for investor scrutiny or M&A due diligence.
Consider Embedded Leases and Service Contracts
One hidden pitfall is embedded leases. Robotics companies often sign service contracts for bundled equipment, like maintenance plus usage of a 3D printing system or AI-enabled inspection unit. These may contain lease components that must be separated and accounted for under ASC 842.
To detect these, review all long-term vendor contracts and evaluate whether:
- You have the right to control the use of an identified asset
- The supplier has substituted the asset or not
- The service is bundled with the use of dedicated equipment
If it qualifies as a lease, it must be reported—even if the contract doesn’t use the word “lease.”
Plan for the Impact on Financial Ratios
Bringing leases onto the balance sheet can significantly change your financial picture. Robotics firms seeking funding or navigating complex capitalization events (like SPACs or acquisitions) should be aware of how lease liabilities affect:
- Debt-to-equity ratio
- Return on assets
- EBITDA (depending on classification of lease expense)
- Working capital calculations
Being transparent with investors and lenders about the changes brought by ASC 842 can avoid confusion and build trust.
Final Thoughts
In robotics, where capital investment and technical infrastructure are cornerstones of the business, understanding lease accounting is more than compliance—it’s part of financial strategy. The ASC 842 standard pushes for clarity and responsibility in how companies present their obligations. With the right systems, consistent tracking, and proactive planning, robotics companies can turn this requirement into a competitive advantage that shows financial maturity and operational foresight.
