NetLessor - Run Monthly Journals - Sales-Type Lease
MONTHLY LEASE TRANSACTIONS
Use Case: On a monthly basis and throughout the month, transactions impacting the lease population need to be identified and tagged to each lease. Once a lease is saved and created, transactions can be posted to the lease. The most common transactions impacting leases are the payments form Lessee and then monthly amortization and close entries.
This section focuses on recording each of those common lease transactions: (1) Lease Payments from Customers, (2) Amortization Journals, and (3) Final Period Entries
RUN MONTHLY JOURNALS
Use Case: On a monthly basis, the activity associated with leased assets needs to be recorded to the GL. The following process applies for both new leases and establishing new balances as well as monthly payment and amortization on existing leases.
Prerequisite: All lease transactions that impact the lease subledger details (setup, modifications, impairments, terminations, etc.) should be completed prior to processing monthly lease journals. Additionally, the status for commenced leases should be updated to reflect a commenced status.
STEP BY STEP PROCESS
- Open to the Journal Entry Posting Page by navigating to NetLessor > Process Monthly Transactions > Monthly Lease Journals
- The “NetLessor Monthly Journal Processing” page as shown as follows:
- Select the desired Transaction Details to post
| Field | Description | Example |
|---|---|---|
| Period | Highlight the period for which you would like to record transactions. | Feb 2021 |
| Run all Months Up To And Including | NOTE: This will not be needed if performed on a monthly basis, but assists with initial setup and catch up periods. | ✓ |
| Transaction Type | Indicate what journal transaction type you would like to run journal entries for (Amortization, Initial Balance, or Go-Live), or leave it as "All" to run all entries. | - All - |
| Subsidiary | Select the Subsidiary for whom lease entries will be recorded. Leaving blank will run for all Subsidiaries. | ACME Holdings |
| Location | Select the Location for whom lease entries will be recorded. Leaving blank will run for all locations. | Boston Warehouse |
| Lease Type | Select the lease type for whom lease entries will be recorded. Leaving blank will run for all lease types. | Blank |
| Lease | Select a specific lease for whom lease entries will be recorded. Leaving blank will run for all leases. | LR0020 Owl Test |
- Once you’ve filtered and selected the desired leases click Generate Transactions to initiate the journal creation process
- You will be redirected to a status page where the status field in the top right is listed as “In Progress”
- Continue to refresh this page until the journal entry processing is complete
- All journal entries arising from the job will be listed within the Batch Summary subtab
- Once complete, click on the direct link to the Lease within the page or navigate to the lease record to review the lease schedule and identify the links to the completed journal entries, which are shown on the far right
Initial Balance Journal Entry
- Select the Hyperlink for the initial balance journal entry to see the recorded journal entry
- The initial balance for a Sales-Type Lease splits the Net Investment in Lease (NIL) into two accounts to show the NIL Lease Receivable and the NIL Unguaranteed Residual Value. It will also move the leased assets carrying cost to the Inventory Clearing Account and record the Lease Selling Profit (the difference between the asset fair value and carrying cost).
- Debit Lease Type’s "Net Investment in Lease" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Receivable Balance"
- Debit Lease Type’s "Net Investment in Lease: NIL - Unguaranteed Residual Account" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Unguaranteed Residual Balance"
- Credit Lease Type’s "Sales: Lease Revenue - Selling Profit” for the NetLessor Lease Schedule Entry’s “Lease Selling Profit Balance”
- Credit Lease Type’s "Inventory/Fixed Asset (Clearing)” for the NetLessor Lease Schedule Entry’s “Inventory Clearing Balance”
Amortization Journal Entry
- Select the Hyperlink for the NetLessor Amortization transaction to see the recorded GL impact
- For Sales-Type leases the NetLessor Amortization records the monthly lease payment against the Lease Receivable Clearing Account, the interest earned on the lease gets allocated to the Lease Interest Income Account and the Net Investment in Lease - Unguaranteed Residual Value. The entry will also book the net payment amount allocated to NIV against the Net Investment in Lease Receivable Account.
- Debit Lease Type’s “Net Investment in Lease: Lease Receivable Clearing" for the NetLessor Lease Schedule Entry’s “Lease Receivable Clearing Balance"
- Credit Lease Type's "Sales: Lease Revenue - Interest" for the NetLessor Lease Schedule Entry’s “Lease Interest Income Balance"
- Credit Lease Type's "Net Investment in Lease" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Receivable Balance"
- Debit Lease Type’s “Net Investment in Lease: NIL - Unguaranteed Residual Value" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Unguaranteed Residual Balance"
- Select the Hyperlink for the last NetLessor Amortization transaction to see the final period Entry
- The last NetLessor Amortization transaction has the effect of amortizing the NIV in Lease down to the estimated residual value of the lease asset, the NIL Lease Receivable down to the residual value guaranteed by the lessee, and the NIV Unguaranteed Residual value to the difference between the estimate and amount guaranteed by lessee.
- Debit Lease Type’s “Lease Receivable Clearing Account" for the NetLessor Lease Schedule Entry’s “Lease Receivable Clearing Balance"
- Credit Lease Type's "Lease Interest Income Account" for the NetLessor Lease Schedule Entry’s “Lease Interest Income Balance"
- Credit Lease Type's "Net Investment in Lease - Receivable Account" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Receivable Balance"
- Debit Lease Type’s “Net Investment in Lease - Unguaranteed Residual Account" for the NetLessor Lease Schedule Entry’s “Net Investment in Lease - Unguaranteed Residual Balance"
- For information about closing out leases, see Mass Close out Leases article.