Lease Modification Processing

Modules > Property lease management > Periodic tasks > Lease modification processing

Use this page to remeasure lease liability and ROU asset for selected expense leases. If the leases are modified, the lease liability is remeasured so that any gain or loss on the modification is recognized.

In addition to remeasuring the lease liability and ROU for an asset, you can also do the following: 

• Mark charges a lease component
• Update the lease component accounts
• Process the initial general journal

Remeasure Lease Liability and ROU Asset

If an expense lease is modified, the lease liability and ROU asset amount must be remeasured or recalculated. Changes to the lease can include, but are not limited to the following:  

• The discount rate or other changes on the Lease Details is changed
• Escalation or abatement lines are added
• Direct costs and incentives are added
• The economic life, residual amount, or purchasing option amount are changed

To remeasure the lease liability and ROU asset, follow these steps: 

1. Set Processing action to Remeasure lease liability and ROU asset.
2. Select the expense lease Classification.
3. Specify the Modification date.
4. To specify a discount on this page, set Discount rate from lease to No and specify the Discount rate.
   Otherwise, set Discount rate from lease to Yes.
5. If the Classification is Financial lease, set Economic life from lease to No and specify the Economic life value.
   Otherwise, set Economic life from lease to Yes.
6. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.
7. Select any records that you do not want to process, and select Remove.
8. Select OK.

If you want to process the transactions in a batch, select Batch.

Note: If invoices for the lease have been created after the specified modification date, the lease is not updated.

Update Lease Component Accounts

To update the lease component accounts, follow these steps:

1. Set Processing action to Update lease component accounts.
2. Select the expense lease Classification.
3. Specify the Lease component main accounts.
   Note: The financial dimension values for the component accounts are from setup on the Propertiespage.
4. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.
5. Select any records that you do not want to process, and select Remove.
6. Select OK.

If you want to process the transactions in a batch, select Batch.

After processing is completed, you can review the lease component accounts on the Charge Details FastTab on the Lease Details page.

Mark Charges as Lease Component

This action updates the default settings of the charges in the list by setting the Lease component option to Yes for charges and updating the main accounts for the lease component accounts. When the default setting of the charge is updated, all leases that use the charge are also updated.

1. Set Processing action to Mark charges as lease component.
2. Specify the Lease component main accounts and financial dimensions.
3. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.

Only expense lease charges that have the Lease component option set to No appear in the list.

4. Select any records that you do not want to process, and select Remove.
5. Select OK.

If you want to process the transactions in a batch, select Batch.

After processing is completed, the Lease component option is changed from No to Yes, and the lease component accounts are updated as specified. Also, all expense leases that use the updated charge(s) are updated with the specified changes. You can review the settings that are updated. 

• On the Chargespage, review the default settings for the charge(s):
  • Lease component is set to Yes.
  • Lease component main accounts are updated as specified.
• On Lease Detailspage, review the Charge Details FastTab for the lease component values for the leases and the corresponding charges.
  • Lease component is set to Yes.
  • Lease component main accounts and financial dimensions are updated as specified.

Note: If the invoices for a charge have already been created, the Lease component option cannot be changed from No to Yes, and the accounts for the lease component are not updated.

Create Initial General Journal

To create the initial invoice journal, follow these steps: 

1. Set Processing action to Create initial invoice journal.
2. Select the expense lease Classification.
3. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.
4. Select any records that you do not want to process, and select Remove.
5. Select OK.

Stub Initial General Journal

To stub the initial invoice journal, follow these steps: 

1. Set Processing action to Stub initial invoice journal.
2. Select the expense lease Classification.
3. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.
4. Select any records that you do not want to process, and select Remove.
5. Select OK.

Unstub Initial General Journal

To unstub the initial invoice journal, follow these steps:  

1. Set Processing action to Unstub initial invoice journal.
2. Select the expense lease Classification.
3. Choose Select to specify the criteria for the records you want to process.
   These records appear in the lines list.
4. Select any records that you do not want to process, and select Remove.
5. Select OK.

If you want to process the transactions in a batch, select Batch.

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Fields

This page contains the following fields: 

Field	Description
Header
Processing action	Select the action that you want to perform: Remeasure lease liability and ROU asset: Recalculates the lease liability and ROU asset amounts for all leases in the list. Update lease component accounts: Updates the lease components accounts for all lines in the list only. Mark charges as lease component : Updates the Lease component setting to Yes and the lease components accounts for all charges in the list. Create initial invoice journal Stub initial invoice journal Unstub initial invoice journal
Classification	Select one of the following:  Financial Lease: The lease is a financial (or capital) lease. Operating Lease:  The lease is an operating lease. Short Term Lease: The lease is for a period of 12 months or shorter. Available for IFRS 16 only.
Modification date	Specify the date for the transaction.
Discount rate from lease	Select whether the discount rate from the lease is used. Yes: Processes the lease modification using the discount rate from the Lease Details. No: Process the lease modification using the discount rate specified on this page.
Discount rate	Specify the discount rate to apply to the lease. The discount is available for financial or operating expense leases and affects the Billing Lines on the Billing Lines page. Required when Discount rate from lease is set to No.
Economic life from lease	Indicates whether the economic life is from the lease:  Yes: Calculates the ROU asset amount using the economic life from the lease. No:  Calculates the ROU asset amount using the Economic Life you specify on this page. Applicable only when Processing action is Remeasure lease liability and ROU asset and Classification is Financial lease.
Economic life	Specify the economic life of the lease. Applicable only when Processing action is Remeasure lease liability and ROU asset and Classification is Financial lease. Required when Economic life from lease is No.
Lease components	Specify the main accounts that you want to use for the lease component. Available when Processing Action is Update lease component accounts or Mark charges as lease component. At least one updated account value is required, and any accounts that are empty remain unchanged. ROU Asset Account Lease Liability Account Interest Expense Account Variable Rent Expense Account Direct Cost GL Account ROU Asset Accumulated Amortization Account (for IFRS 16 or ASC 842) Available only for financial leases. Gain on Lease Account Loss on Lease Account Amortization Expense Account Lease Expense Account Tenant Incentive GL Account ROU Asset Adjustment Account
List
Lease number	Displays the lease number.
Name	Displays the name for the lease.
Category name	Displays the category for the lease.
Lease type	Displays the lease type.
Cust/Vend account	For a revenue lease, displays the customer number. For an expense lease, displays the vendor number. The label that appears is based on the lease type selected.
Cust/Vend name	Displays the customer or vendor name.
Currency	Displays the currency of the lease.
Lease status	Displays the status of the lease.
Level 1, 2, or 3 number	Displays the category level combination for the lease.
Charge number	Displays the charge number.
Name	Displays the charge name.

Buttons

This page contains the following buttons: 

Button

Description

OK

Executes the specified processing action for all selected records in the list:  Re-Measure Lease Liability and ROU Asset: Remeasure lease liability and ROU asset for the selected leases. Update Lease Component Accounts: Updates all accounts for the lease components as specified. Only one journal entry is created for all the accounts that are updated. Unmark Lease Short Term Election: Updates the selected records so that the Short Term Election box is cleared. As part of the processing, the ROU asset amounts are calculated and the initial journal entry is created. Mark Charges as Lease Component: Updates the charges in the leases so that the Lease Component is set to Yes.

See also

Expense Lease Accounting Standard

Billing Lines