NetLease Month to Month Leases
Overview
NetLease provides users with three options to create a month to month lease. Option 1) Select the Cash Basis (Non-GAAP) lease classification, Option 2) Select the Short Term/Low Value lease classification, or Option 3) Select the Operating/Financing lease classification. Follow the steps below in order to perform each option.
Option 1) Cash Basis (Non-GAAP) Lease Classification
STEP BY STEP PROCESS
Navigate to NetLease > Lease Management > New Lease
Enter the lease information and select Cash Basis (Non-GAAP) in the lease classification drop down menu.
By choosing this classification, your schedules will appear under the Operating Schedule subtab and the corresponding journal entries with this lease will be using Cash Basis.
Option 2) Short Term / Low Value Lease Classification
STEP BY STEP PROCESS
Navigate to NetLease > Lease Management > New Lease
Enter the lease information and select Short Term / Low Value in the lease classification drop down menu
As opposed to the Cash Basis (Non-GAAP) classification, the Short Term / Low Value classification enables NetLease to calculate deferred rent.
Once you have selected the Short Term / Low Value classification, you have another two options when deciding what to put for the Lease Term (Months) field. Option 1) You can put the lease term as 1 month and modify the lease for each month you want to extend the lease. Option 2) You can estimate how long you think you will hold the lease ( i.e. 6 or 9 months) and put that amount as the lease term. You can then terminate the lease early if you choose to not renew the lease for the entire estimated lease term.
If you choose Option 2) estimated lease term, the future payments and expenses will be included in the waterfall reports. However, if you do not want to see those numbers you can customize your reports to exclude them.
Option 3) Select the Operating/Financing lease classification
STEP BY STEP PROCESS
Navigate to NetLease > Lease Management > New Lease
Enter the lease information and select Operating or Financing in the lease classification drop down menu
By selecting a classification of Operating or Financing your lease will be accounted for under normal ASC 842 guidance.
Once you have selected the lease classification, you have another two options when deciding what to put for the Lease Term (Months) field. Option 1) You can put the lease term as 1 month and modify the lease for each month you want to extend the lease. Option 2) You can estimate how long you think you is reasonably certain you will hold the lease ( i.e. 6 or 9 months) and put that amount as the lease term. You can then terminate the lease early if you choose to not renew the lease for the entire estimated lease term.
If you choose Option 2) estimated lease term, the future payments and expenses will be included in the waterfall reports. However, if you do not want to see those numbers you can customize your reports to exclude them.