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

To Account for a Lease that is Classified in the Middle of its Term

Requirement

For existing leases, the date of initial application is the beginning of the first comparative period presented in the first financial statements in which the entity applies this guidance. Assess the outstanding ROU Asset and the lease liability as of this date.

(If the lease is to occur in the future, the Commencement Date will be the Start Date of the lease.)

Procedure

1. Invoke 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.
2. In the Recurring Costs section, enter costs records representing any adjustments required or allowed by FASB 842, such as:

   • prepaid or accrued rent, lease incentives, impairments (if applicable), or unamortized initial direct costs

   • any write-offs of previously reported assets and liabilities—for example, unamortized initial direct costs that don’t qualify

   Use a Due Date after the Commencement Date for these costs.

3. Invoke the Lease Classification Wizard. Complete:

4. Work through the questions of the Real Estate Portfolio Management / Lease Administration / Lease Portfolio / Lease Classification Wizard, 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

The amortization schedule starts from this Commencement Date.

The schedule accounts for adjustments represented by the costs entered. The costs are applied in the fiscal period in which the cost Due Date falls.