NetLease - ROU Clearing Account Reconciliation

Purpose

The ROU clearing reconciliation report is used to review initial direct costs, prepayments, and incentives recorded prior to commencement, as well as amounts receivable upon termination of a lease. Vendor bill payments recorded by Accounts Payable, receivables recorded by Accounts Receivable, and the initial balance and termination entries booked by NetLease can all run through the ROU clearing account. This activity should net to zero for each lease once the offsetting entry has been recorded — the initial balance entry at commencement for pre-commencement costs, and the corresponding receipt for amounts arising on termination.

Step-by-Step Process

Navigation

NetLease > Reports (All or GL & Recon) > ROU Clearing Account Reconciliation > Run

Filtering

The report can be narrowed by subsidiary, currency, department, class, location, lease, accounting period, and date range. Additional filters control the level of detail, currency conversion, and which categories of transaction are included. Once the desired filters are set, click Preview to view the reconciliation.

Filters that affect which transactions are returned, or how balances are calculated, are described in the next section.

Understanding the Filters

Accounting Period vs. From Date / To Date

These are two separate filtering modes rather than filters that combine. Selecting an Accounting Period clears the From and To Date fields; entering a From or To Date clears the Accounting Period. Reports open filtered to the current open accounting period by default.

Accounting Period — reports on a single posting period. Transactions are included based on the period they posted to, regardless of the date on the transaction itself. A transaction dated 6/15 that posted to July is treated as July activity.

From Date / To Date — reports on a custom date range, which can span or split periods. By default, transactions are included based on the transaction date, not the period they posted to. That same 6/15 transaction posted to July is treated as June activity.

Use Accounting Period Date — when checked, transactions are included based on the posting period start date rather than the transaction date. Use this option when reporting on a custom date range that needs to follow posting periods.

If the checkbox is enabled, both a From Date and a To Date are required. The report will not run with either left blank.

When Use Accounting Period Date is enabled, a period is included based on its start date, so date ranges effectively select whole periods. Use From and To dates that align to period boundaries — a range of 6/15–7/15 excludes June entirely and includes all of July, including activity dated after 7/15.

On this report, clearing activity for a single lease is not necessarily confined to one period. Costs recorded before commencement are offset by the initial balance entry at commencement; amounts arising on termination are offset when the corresponding receipt is recorded. A reporting window narrow enough to exclude one side of that activity will show a balance that does not net to zero even though the underlying records are correct. Widen the range to span both sides of the activity, and confirm the date basis so that transactions are captured in the period the general ledger reports them in.

Export Level

Controls how far the report breaks down before it stops summarizing — that is, what a single row represents. Summary levels roll many records into one line; detail levels expand to individual transactions. Select the summary level that matches the balance being tied out, and drop to a detail level when locating the source of a variance.

Consolidated Exchange Rate / Consolidation Date

Determines which exchange rate converts balances into the display currency, and changes the amounts reported. Consolidation Date is only editable when Custom is selected; with any other option it is greyed out and the rate date is derived automatically. Per-Account is only offered when the display currency matches the subsidiary currency.

Tagged Impacts Only

Limits the report to transaction lines carrying a NetLease lease tag.

Leave this filter unchecked when reconciling. Payments and receivables that are not tagged to a lease are reported under - None -, and an unexpected balance there is a common reason a reconciliation does not net to zero. Enabling Tagged Impacts Only removes those lines from the report, hiding the variance rather than resolving it.

Results

Upon running the report the user will see the ROU clearing account by lease. If the lease payments and receivables recorded match the corresponding NetLease initial balance or termination entry in the lease schedule, each lease will net to zero. Click Export to download the report to Excel.

Troubleshooting

The reconciliation does not net to zero?

  • Does the lease payment or receivable on the vendor bill or journal entry match the lease schedule?
  • Is the lease payment or receivable transaction tagged with the appropriate lease? If a transaction has been recorded and is not tagged with a lease, the balance is reported under - None -.
  • Are the lease payments coded to the appropriate accounts? 
    • When AP makes a lease payment the following journal entries should be recorded:
      • Debit - ROU Clearing Account
      • Credit - Cash/AP
    • When AR records a lease receivable (lease incentive) the following journal entries should be recorded:
      • Debit - Cash/AR
      • Credit - ROU Clearing Account
  • Does the reporting window include both sides of the activity? Clearing activity is offset by a later entry — the initial balance entry at commencement for pre-commencement costs, or the corresponding receipt for amounts arising on termination. A range that captures only one side will not net to zero.
  • When filtering by From/To Date, confirm the date basis. A transaction dated in a different month than its posting period may fall inside or outside the reporting window unexpectedly. Enable Use Accounting Period Date, or filter by Accounting Period instead.

A balance appears in "- None -"?

  • - None - represents activity posted to the ROU clearing account that is not tagged to a lease record — most commonly a vendor bill or receivable entered without the lease reference, or a manual journal entry posted directly to the account.
  • Set Export Level to Full Hierarchy to display the individual transactions, then tag them to the appropriate lease.
  • Do not enable Tagged Impacts Only to clear this balance. Doing so removes the untagged lines from the report without correcting the underlying records.
  • For other causes of a - None - line on NetLease G/L reports, including untagged impacts on reports other than this one, see Troubleshooting the "- None -" Line on G/L Reports.
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