NetLease - Run Monthly Interest Payable Reclass

Use Case: NetLease records transactions on a monthly basis regardless of whether a payment was made. This is done in order to align with the matching principle. For Financing leases, in months where a payment is not made, interest expense will still be recorded within NetLease, and the offsetting interest payable is recorded as an increase (CR) to the Lease Liability account.

As an accounting election, customers may decide they would like to reclass those embedded interest payable amounts from Lease Liability to a separate Interest Payable account. NetLease supports this with the option to run an interest payable reclass.

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. The reclass of interest payable typically also takes place AFTER the amortization entries and ST/LT Liability reclass.

Step By Step Process:

  • Open to the Reclass Journal Entry Posting Page by navigating to NetLease > Process Monthly Transactions > Monthly Reclass Journals


             

  • You are navigated to the NetLease Monthly Reclass Journal Processing page. Select "Interest Payable Reclass" as the Reclass Journal Type  
  • Select the appropriate filters to run the journal entries and select Generate Transactions.

Field

Description

Example

Filter for Period

Highlight the period for which you would like to record transactions

Jan 2023

Subsidiary

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

Company, Inc.

Reclass Journal Type

The Reclass Journal type defaults to Short Term/Long Term Reclass. Change the drop-down to Interest Payable Reclass

Interest Payable Reclass

  • Refresh the page until the Processing Status indicates Complete and the journal entries are listed in the batch summary
  • You can select the Journal Entry link to review the journal entry

  • With the reversal entry linked in the Reversal # Field on the main journal entry

  • Note that the reclass journal entries are tied to the lease record and can be viewed by navigating back to the lease record and looking at the Other Related Transactions sublist within the Related Records subtab

  • Reclass journals are also tagged to the NetLease Schedule Entry period they apply to under the Reclass Information field group


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