NetLease Non-Consecutive ROU Asset Amortization

Overview

NetLease supports non-consecutive ROU asset amortization through custom calendars, allowing amortization to occur only during specific periods based on actual asset usage. This functionality is particularly relevant for IFRS 16 compliance, where entities can amortize ROU assets based on usage patterns rather than evenly over time.

This feature is commonly applied when lease assets are used seasonally or intermittently. For example, a ski lodge lease might only generate usage during winter months, and amortization expense should be recognized only during those periods.

Video Walkthrough: Non-Consecutive ROU Asset Amortization Setup

Step-by-Step Process

Create a Custom Calendar

1. Navigate to NetLease > NetLease Setup > Manage Custom Calendars
2. Click New NetLease Custom Calendar to create a new custom calendar or open an existing calendar
3. Give the calendar a Name and select a Calendar Format
4. Populate accounting periods for the calendar by clicking Sync to Existing Accounting Periods
   • This automatically populates period names and start/end dates from NetSuite
5. Define usage periods in the Usage column:
   • Enter a numeric value (typically "1") for each period when the asset will be in use
   • Leave usage blank or zero for periods with no usage
   • Usage amounts are weighted, allowing different values if certain periods require heavier weighting View full size
   • Example: For a ski lodge operating November through April:
     • Enter "1" in the Usage column for January, February, March, April, November, and December
     • Leave remaining months blank or zero
     • Repeat this pattern for each year of the lease term

6. Click Save to preserve the custom calendar

Create a Lease Using the Custom Calendar

1. Navigate to NetLease > Lease Management > New Lease
2. Populate the lease record with the required lease details like normal
3. In the Accounting subtab, select the custom calendar created in the previous section from the Custom Calendar field View full size
4. Click Save
5. Click Generate Schedule to create the amortization schedule

Review the Amortization Schedule

1. After schedule generation completes, navigate to the appropriate schedule under the Amortization Schedules subtab
2. Verify the following:
   • Amortization expense appears only in periods with usage defined in the custom calendar
   • The monthly amortization amount is calculated based on the weighted usage
   • Periods without defined usage show zero amortization expense
   • The ROU asset is fully amortized by the end of the usage periods

Considerations

• Usage amounts must be defined for all relevant periods before generating the lease schedule; changes to the custom calendar after schedule generation require schedule regeneration
• The total ROU asset balance is divided by the sum of all usage periods, not the total lease term
• Custom calendars are specific to individual leases and must be assigned during lease setup