Lease Type Configuration

NetLease enables users to set up multiple lease types for your operating (ASC 842 only) and financing leases. Each lease type allows for separate mapping of transactions to your chart of accounts.

The most common lease types include the following:

  • Real Estate
  • Equipment
  • Vehicles

Additionally, lease types can be set up to calculate present value based on payments being made at the beginning of the month (in advance), end of the month (in arrears), or at irregular intervals (precision).

SEPARATE OPERATING & FINANCING ACCOUNTS ARE NOT REQUIRED

Note that NetLease reports are already designed to segregate between Operating and Financing, as well as across all your lease types. Therefore, separate accounts are not required; however, your accounting team may still elect to create and use separate accounts across varying lease types to support additional reporting requirements. 

NetLease offers a tool to help automate the lease type configuration, or users can set up their lease types manually.

Automated Lease Type Configuration

Step By Step Process:

  • Navigate to the NetLease system setup page by accessing NetLease > NetLease Setup > System Setup


  • Select the Import Tools subtab and then the Default Accounts and Lease Types Import Tool Link 

  • This will take you to the NetLease Default Accounts and Lease Type Imports record. You can click on the Accounts and Lease Types subtabs to see the accounts and lease types that will be created as well as the default settings and mappings for each lease type.
  • Select the Import button


  • The system will display a status screen while it creates and adds the import.
  • Periodically refresh the page until the status is "complete" and all records are "imported successfully".
  • The lease accounts will now appear in your chart of accounts and can be edited therein if you prefer to change descriptions, account numbers, names, subsidiaries, etc. Any changes made will flow through to the lease type mapping if the account is found therein. 
  • Additionally, the lease types will now appear in NetLease. These types and their default settings can be edited if needed by going to NetLease > NetLease Setup> Manage Lease Types and clicking Edit next to the type you want to change.  
  • This will take you to the Lease Type Record.
  • Update the Primary Information if desired:
    • Lease expense convention, select whether a full month's worth of lease expense should be calculated in the first and last month of the lease (Full Month) or whether lease expense calculation should be proportioned in the first and last month of the lease by how many days in the month the lease is active (Partial Month (Expense only)) or whether lease liability, interest and expense calculation should be proportion in the first and last month of the lease by how many days in the month the lease is active (Partial Month (Liability, interest, expense only)). 
    • Default lease classification, such as operating, financing, short term/low value, etc.
    • Default payment timing (In Arrears, In Advance, or Precision), which can be overridden at the lease level
  • Updated the Account Information if desired:
    • For lease types classified as Operating - Sublease, complete the Operating Sublease Accounts tab by mapping the appropriate account in your chart of accounts
    • For non-lease payments, complete the Non-Lease Payment Accounts tab by mapping the appropriate accounts in your chart of accounts
    • If custom reclass journals have been created, complete the Custom Reclass Accounts tab by mapping the appropriate account in your chart of accounts
  • Click Save once all the desired changes have been made.

Manual Lease Type Configuration

Prerequisite:

All required accounts should already be set up and configured in the chart of accounts

Step By Step Process:

  • Navigate to the lease type setup page by accessing NetLease > NetLease Setup > Manage Lease Types

 

  • Select the New NetLease Lease Type button to bring up the lease type setup page


  • Input the following Primary Information into the form:
    • Name for the lease type, such as equipment, real estate, vehicles, or software
    • The lease expense convention, select whether a full month's worth of lease expense should be calculated in the first and last month of the lease (Full Month) or whether lease expense calculation should be proportioned in the first and last month of the lease by how many days in the month the lease is active (Partial Month (Expense only)) or whether lease liability, interest and expense calculation should be proportion in the first and last month of the lease by how many days in the month the lease is active (Partial Month (Liability, interest, expense only)). 
    • Default lease classification, such as operating, financing, short term/low value, etc.
    • The default lease classification, such as operating, financing, short term/low value, etc.
    • The default payment timing (In Arrears, In Advance, or Precision), which can be overridden at the lease level
  • Complete the Account Information section by mapping each account to the corresponding or appropriate account in your chart of accounts
  • For lease types classified as Operating - Sublease, complete the Operating Sublease Accounts tab by mapping the appropriate account in your chart of accounts
  • For non-lease payments, complete the Non-Lease Payment Accounts tab by mapping the appropriate accounts in your chart of accounts
  • If custom reclass journals have been created, complete the Custom Reclass Accounts tab by mapping the appropriate account in your chart of accounts



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