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Real Estate Portfolio Management / Lease Administration / Lease Portfolio / Extension for Lease Accounting

To Record Initial Direct Costs

Initial direct costs -- fees and commissions incurred to the lessor when establishing the lease -- are added to the ROU Asset in the period in which they are expended.

Procedure

Enter the lease costs using the Add/Edit Wizard or the Lease Portfolio Console. Both are available on the Process Navigator at Real Estate Portfolio Management / Lease Administration / Lease Portfolio.

You can also use the Real Estate Portfolio Management / Cost Administration / Cost Administrator / Cost Wizard.

1. Enter initial direct costs using the LEASE - INITIAL DIRECT COSTS cost category. These costs will then be included in the FASB 842 calculations. Enter these costs using the "Expense" field rather than the "Income" field.
2. Fill in the Date Due, which will be used as the date for all costs (as for future planned and recurring costs, we don't have the Date Paid).
3. Load the Real Estate Portfolio Management / Lease Administration / Lease Portfolio / Lease Classification Wizard and work through the tabs changing the options from Pending and moving through the various tabs. The program saves the lease classification data and regenerates a new amortization schedule.

Outcome

• Costs in the cost tables represent initial direct costs and tenant improvement costs.
• The Lease Audit Log holds a record of lease information as initially approved.
• The Lease Amortization Schedule holds schedule of amortized costs over life of lease.