NetLease - 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 payments 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 NetLease > Process Monthly Transactions > Monthly Lease Journals
  • The NetLease Monthly Journal Processing page is 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

Mar 2019

Run all Months Up To And Including

Select this checkbox to review the entire lease schedules for required journal entries

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, Transition, or Initial Balance), or keep the field blank to run all entries.

Blank

Subsidiary

Select the Subsidiary for whom lease entries will be recorded. Leaving blank will run for all Subsidiaries.

Company, Inc.

Location

Select the Location for whom lease entries will be recorded. Leaving blank will run for all Locations.

Boston

Lease Type

Select the Lease Type for whom lease entries will be recorded. Leaving blank will run for all Lease Types.

Equipment

Lease

Select a specific lease for whom lease entries will be recorded. Leaving blank will run for all Leases.

LA0370

  • Once you’ve filtered and selected the desired leases, click Create Journals 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.

  • Select the Hyperlink for the initial balance journal entry to see the recorded journal entry.
  • Note that the initial balance entry establishes the ROU Asset; Lease Liability; and records the net of Prepaid Lease Payments, Lease Incentives, and Initial Direct Costs to the ROU Clearing Account.
    • Operating or Financing Lease
      • Debit Lease Type’s “Right of Use Asset Account” for the NetLease Lease Schedule Line’s “Right of Use Asset Balance”
      • Credit Lease Type’s “Lease Liability Long Term Account (Primary)” for the NetLease Lease Schedule Line’s “Lease Liability Balance”
      • Credit Lease Type’s “ROU Clearing Account” for the NetLease Lease Schedule Line’s “Net Balance”
    • Operating Sublease
      • N/A
    • Short-Term, Low Value, or ASC 840 Lease
      • Debit Lease Type’s “Deferred Rent Account” for the NetLease Lease Schedule Line’s “Deferred Rent Balance”
      • Credit Lease Type’s “ROU Clearing Account” for the NetLease Lease Schedule Line’s “Deferred Rent Balance”

  • Select the Hyperlink for the NetLease Amortization transaction to see the recorded GL impact
  • For an Operating Lease, the NetLease Amortization records the Lease Expense as a debit to the Lease Expense Account (Operating), the Lease Liability is debited by the Liability Reduction, the ROU Asset Accumulated Amortization is debited by the Asset Reduction, and the Payment is accrued to the Lease Payable Clearing Account at that month’s payment amount.
    • Operating Lease
      • Debit Lease Type’s “Lease Expense Account (Operating)” for the NetLease Lease Schedule Line’s “Lease Expense”
      • Debit Lease Type’s “Lease Liability Long-Term Account (Primary)” for the NetLease Lease Schedule Line’s “Liability Reduction”
      • Debit Lease Type’s “Right Of Use Asset Accumulated Amortization Asset Account” for the NetLease Lease Schedule Line’s “Asset Reduction”
      • Credit Lease Type’s “Lease Payable Clearing Account” for the NetLease Lease Schedule Line’s “Payment”
    • Financing Lease
      • Debit Lease Type’s “Right of Use Asset Amortization Expense Account” for the NetLease Lease Schedule Line’s “Amortization Amount”
      • Debit Lease Type’s “Lease Liability Long-Term Account (Primary)” for the NetLease Lease Schedule Line’s “Allocated To Principal”
      • Debit Lease Type’s “Interest Expense Account” for the NetLease Lease Schedule Line’s “Allocated To Interest”
      • Credit Lease Type’s “Right Of Use Asset Accumulated Amortization Asset Account” for the NetLease Lease Schedule Line’s “Amortization Amount”
      • Credit Lease Type’s “Lease Payable Clearing Account” for the NetLease Lease Schedule Line’s “Payment”
    • Operating Sublease
      • Debit Lease Type's "Lease Payable Clearing Account" for the NetLease Schedule Line's "Payment"
      • Debit Lease Type's "Sublease Accrued Rent Receivable" for the NetLease Schedule Line's "Allocated to Accrued Rent"
      • Credit Lease Type's "Sublease Income Account" for the NetLease Schedule Line's "Lease Income"
    • Short-Term, Low Value, or ASC840 Lease
      • Debit Lease Type’s “Lease Expense Account (Operating)” for the NetLease Lease Schedule Line’s “Lease Expense (Short Term)”
      • Credit Lease Type’s “Lease Payable Clearing Account” for the NetLease Lease Schedule Line’s “Payment”
      • Debit Lease Type’s “Deferred Rent Account” for the NetLease Lease Schedule Line’s “Allocated To Deferred Rent”

  • For a Financing Lease, the NetLease Amortization records the monthly straight-line amortization of the ROU Asset against Accumulated Amortization. Interest is recognized against the Initial Lease Liability Balance, the Payment is accrued to the Lease Payable Clearing Account at that month’s payment amount, and the Lease Liability is brought down under the effective interest method.

  • For Operating Sublease, the NetLease Amortization records the monthly straight-line sublease income. The Payment is accrued to the Lease Payable Clearing Account at that month’s payment amount, and the difference between the straight-line sublease income and the payment amount is allocated to Sublease Accrued Rent Receivable .

  • Via the NetLease System Setup setting, Automate Final Period Journals, the last schedule line of the lease term can be optionally setup to generate an NetLease Final Period transaction in addition to the normally scheduled NetLease Amortization transaction

  • The NetLease Final Period transaction has the effect of clearing out what remains in accumulated amortization for the leased asset
    • Financing Lease
      • Debit Lease Type’s “Right Of Use Asset Accumulated Amortization Asset Account” for the sum of the “Asset Reduction” recorded to date
      • Credit Lease Type’s “Right of Use Account” for the sum of the “Asset Reduction” recorded to date
    • Operating Lease
      • Debit Lease Type’s “Right Of Use Asset Accumulated Amortization Asset Account” for the sum of the “Amortization Amount” recorded to date
      • Credit Lease Type’s “Right of Use Account” for the sum of the “Amortization Amount” recorded to date
  • Operating Sublease
    • N/A
  • Short-Term, Low Value, or ASC840 Lease
    • N/A


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