NetLessor - Assign Accounting Information to the Lease Record
Use Case: NetLessor allows flexibility in the accounting for a lease. The Accounting Subtab captures key information that is used to properly account for the lease over time.
KEY DATA CAPTURED WITHIN THE ACCOUNTING SUBTAB
- The Lease Classification - Direct Input Criteria section of the Accounting subtab asks key questions to assist with lease classification.
Field Name | Description | Example |
Collectability Probable? | This box defaults to checked, assuming collectability is probably with any leasing customer we engage with | ✓ |
Lease Transfer Ownership? | This box should be checked if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. | ✓ |
Purchase Option Exercise Reasonability Certain? | This box should be checked if the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. | ✓ |
Underlying Asset Specialized (No Alternative use)? | This box should be checked if the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. | ✓ |
- The Lease Classification - Calculated Criteria section of the Accounting subtab captures information to assist with lease classification
Field Name | Description | Example |
| Lease Term Major Part of Remaining Economic Life | This box is auto-checked based on the comparison of the useful life percentage against the global setting "Threshold % for Major Portion Economic Life." The calculated percentage is listed below in the "Lease Term as % of Useful Life" field. | ✓ |
| Lease Term as % of Useful Life | This field is auto-calculated and equals the Lease Term as % of of the Leased Asset Remaining Useful Life. | 30.0% |
| PV of PMTS & Lessee GRV Represent Substantially all of FMV? | This box is auto-checked based on the comparison of the present value of payments & lessee guaranteed residual value against the global setting "Threshold % Residual Guaranteed by Lessee." | ✓ |
| NPV of PMT + Lessee GRV | This field is auto-calculated and equals the present value of all payments & the residual value guaranteed by the lessee at the lease implicit rate | 20,000.16 |
| NPV of PMT + Lessee GRV as % of FMV | This field is auto-calculated and equals the present value of payments & residual value guaranteed by the lessee as a % of the Leased Asset Fair Market Value. | 28.88% |
| PV of PMT & 3RD - PTY GRV Represent Substantially all of FMV | This box is auto-checked based on the comparison of the present value of payments & 3rd party guaranteed residual value against the global setting "Threshold % Residual Guaranteed by 3rd Party." | ✓ |
| NPV of PMT + 3P GRV | This field is auto-calculated and equals the present value of all payments & the residual value guaranteed by a 3rd Party at the lease implicit rate | 35,000.16 |
| NPV of PMT + 3P GRV as % of FMV | This field is auto-calculated and equals the present value of payments & residual value guaranteed by a 3rd Party as a % of the Leased Asset Fair Market Value. | 50.53% |
- The Accounting Settings tab - Navigate to Accounting subtab > Accounting Settings which will assist in tracking renewals for the lease auto renewal details
| Field Name | Description | Example |
| Auto Renewal | Check this box if the lease will auto renew at the end of the lease term | ✓ |
| Auto Renewal Term (months) | Input the expected term of the renewed lease in # of whole months | 24 |
- The Accounting Overrides section includes fields that are
Field Name | Description | Example |
No GL Impact
| Check this box if the lease should NOT have any GL activity applied to it (e.g., for tracking purposes only as it is on a custom record with no connection to a NetSuite ledger) This field prevents recording of journal entries against the lease. As a further control, the lease record can be kept with the status as PENDING on the lease header. | ✓ |
Lease Locked (Transactions Recorded)
| This box is checked when journal entry transactions have been recorded against the lease, preventing the system from allowing changes to the lease schedule and relevant fields. | ✓
|
Flagged For Mass Update | Check this box to facilitate isolating a lease to be picked up in a batch processing job. | ✓
|
| Split Net Investment in Lease | When this box is check the system will split the Net Investment in the Lease into the Lease Receivable and the Unguaranteed Residual Value | ✓ |
- At the bottom of the Accounting subtab > Account Mapping, the account mappings are listed for the corresponding lease type.