NetLessor - Run Monthly Journals - Operating 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 from 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 | 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, Initial Balance, or Go-Live), or leave it as "All" to run all entries. | Amortization |
| 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. | Blank |
| 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. | LR0013 Tetherball |
- 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 journal entry 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
- When an operating lease has an initial direct cost associated with the asset, the initial balance journal entry will show as follows:
- Debit Lease Type’s "Other Assets: Capitalized Initial Direct Cost” for the NetLessor Lease Schedule Entry’s “Lease Capitalized Initial Direct Cost Balance”
- Credit Lease Type’s "Lease Capitalized Cost or Prepay (Clearing)” for the NetLessor Lease Schedule Entry’s “Lease Capitalized Cost or Prepay Balance”
Amortization Journal Entry
- Select the Hyperlink for the NetLessor Amortization transaction to see the recorded GL impact
- For Operating leases the NetLessor Amortization records the monthly straight-line amortization of the Initial Direct Cost against the Accumulated Amortization Expense account. The Revenue is recognized against the Lease Receivable Clearing Account.
- Debit Lease Type’s “Net Investment in Lease: Lease Receivable Clearing Account" for the NetLessor Lease Schedule Entry’s “Lease Receivable Clearing Balance"
- Credit Lease Type's "Sales: Lease Revenue - Operating" for the NetLessor Lease Schedule Entry’s “Revenue Balance"
- Debit Lease Type’s “Expenses: Initial Direct Cost Amortization” for the NetLease Lease Schedule Entry’s “Initial Direct Cost Amortization Expense Balance”
- Credit Lease Type's "Other Assets: Capitalized Initial Direct Cost" for the NetLessor Lease Schedule Entry’s “Capitalized Initial Direct Cost 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 clearing out what remains in accumulated amortization for the leased asset.
- For Operating leases the NetLessor Amortization records the remaining monthly straight-line amortization of the Initial Direct Cost against the Accumulated Amortization Expense account. The Revenue is recognized against the Lease Receivable Clearing Account.
- Debit Lease Type’s “Net Investment in Lease: Lease Receivable Clearing" for the NetLessor Lease Schedule Entry’s “Lease Receivable Clearing"
- Credit Lease Type's "Sales: Lease Revenue - Operating" for the NetLessor Lease Schedule Entry’s “Revenue Balance"
- Debit Lease Type’s “Expenses: Initial Direct Cost Amortization” for the NetLease Lease Schedule Entry’s “Initial Direct Cost Amortization Expense Balance”
- Credit Lease Type's "Other Assets: Capitalized Initial Direct Costs" for the NetLessor Lease Schedule Entry’s “Capitalized Initial Direct Cost Balance"
- For information about closing out leases, see Mass Close out Leases article.