NetLessor - Create a New Lease Record
Use Case: These steps can be followed to review and obtain information on an existing lease or as a starting point to create a new lease
Prerequisite: All setup & configuration activities (Lease Type and Account Mapping) need to be complete
STEP BY STEP PROCESS
- Select NetLessor > Lease Management > New Lease
- A blank New NetLessor Lease Form appears, from which you can create a new lease
- In order to review an existing lease, you can select the List link in the top right to search for or select an existing lease record.
- Manually update the Primary Information form section and fields as indicated below
Field Name | Required | Description | Example |
ID | Auto-generated | A unique ID for the lease and the primary identifier within NetLessor for the lease record. | LA00370 |
Name | Yes | Free form input for NetLessor users. This can be used for the lessor’s contract # or other identifying information for the leased asset. | 17 Cherry Tree Lane, London KY |
Lease Type | Yes | Assign the lease type from the drop-down list, which are defined as part of global settings. | Real Estate |
Lease Classification | Yes | The system will do the various calculations to determine the classification of the lease for you | Financing |
Subsidiary | Yes | The subsidiary where all transactions will be recorded | Company, Inc. |
Customer | Yes | The Lessee to whom the leased asset is leased. This is the customer to whom lease invoices will be invoiced to. | McGeever Properties |
Currency | Yes | The contract currency for the lease, typically the currency in which payments will be made. This defaults to the Vendor’s primary currency. | US Dollar |
Notes | No | A text area field to include any relevant notes or lease-related information. | NNN; no renewal |
Asset Photo | No | Optional file field to upload a picture of the leased asset. | Building.jpg |
- Manually update the Schedule Information form section and fields as indicated below
| Field Name | Required | Description | Example |
Status | Yes | Pending = tables can be created, but transition or amortization journals will not. Commenced = the lease is ready for postings. Complete = the lease has reached termination date. Terminated = the lease was terminated early | Commenced |
Commencement Date | Yes | The date on which a lessor makes an underlying asset available for use by a lessee NOTE: NetLessor uses a full month convention to generate schedules; i.e., mid-month dates will not result in partial month calculations. | 01-Jan-2019 |
| End Date | Calculated | The anticipated ending date of the lease, which is calculated (commencement date + lease term). | 31-Dec-2021 |
Lease Term
| Yes
| The anticipated duration (in months) of the lease (i.e., noncancelable period adjusted for options the lessee is reasonably certain to exercise).
| 36 |
Initial Payment Amount | Yes | Payments made by a lessee for the leased asset. For fixed payment leases, this represents the monthly payment for the duration of the lease. For variable payments (any NOT paid monthly at a fixed rate), this represents the first payment following commencement. | $8,000.00 |
Lease Prepayments
| No
| Any lease payments made before the commencement date.
| $8,000.00
|
Initial Direct Costs | No | Incremental costs of obtaining a lease that would not have been incurred if the lease had not been obtained. | $500.00 |
Economic Life of leased asset (months)
| No | Input the remaining economic life of the leased assets in whole months. Note that this field will default from the lease type, but may be updated, unless locked down during initial configuration. Contact your administrator to adjust form edit controls | 120
|
Lease Implicit Rate | Auto-Generated | This field is calculated from each of the relevant inputs (payments, residual value, carrying cost, etc.) and is used to calculate and apply interest on a sales-type lease | 3.0625% |
Lease Discount Rate | Auto-Generated | This field is calculated from each of the relevant inputs (payments, residual value, carrying cost, etc.) and is used to calculate and apply interest on a direct financing lease | 5.6772% |
Leased Asset Fair Value | Calculated | Input the Fair Value of the leased asset. | $7,500.00 |
| Leased Asset Carrying Cost | Calculated | Input the carrying costs of the leased asset. Any difference between the fair value and carrying cost represents lease selling profit in a sales-type lease | $1,500.00 |
- Manually update the Key Payment Details and Deposit Information form section and fields as indicated below
| Field Name | Required | Description | Example |
| Residual Value Total Estimate | Calculated | Input the total estimated residual value of the leased asset you expect to derive at the end of the lease term. Note that this amount should be inclusive of any guaranteed residual value (i.e., the greater of the expected residual value or guaranteed residual value) | $5,500.00 |
| Residual Value Guaranteed by Lessee | Calculated | Input the residual value amount to be guaranteed BY THE LESSEE under the lease agreement | $3,500.00 |
| Residual Value Guaranteed by 3rd Party | Calculated | Input the residual value amount to be guaranteed BY A THIRD PARTY under the lease agreement | $4,500.00 |
| Variable Rate Index | No | If the Variable Rate Lease box is checked, select the variable rate index the variable payments of the lease are dependent on. | Bond |
| Variable Non-Lease Payments | No | Select any additional variable amounts payable associated with with a lease. | Index |
| Variable Rate Lease | No | Check this box if the lease contains Variable Lease Payments. | ✓ |
| Deposit Amount (Refundable Only) | No | The REFUNDABLE Deposit paid to the lessor. Note that non-refundable deposits should be included as lease payments This field is for reporting purposes only; no journal entry transactions are created from this information | $1,000.00 |
| Deposit Release Date | No | Date the deposit is expected to be released to the lessee | 2/4/2020 |
| Deposit Notes | No | Relevant information about the customer deposit | Deposit paid in full |
| Deposit Release | No | This box should be checked when the deposit has been refunded to the lessee | ✓ |
- Click Save to establish the lease and generate a Lease ID
- Click Determine Lease Classification
- Your new lease will now show the classification
- Click the Accounting Subtab to see the Lease classification calculated criteria
- Your lease is now ready to be Amortized. See the Lease Schedule Generation article for more information
- For more information on the Accounting Subtab, see article Assign Accounting Information to the Lease Record