Record lease modifications for an early termination that happens after a lease classification is already approved. This modification may happen after the organization has already reported the lease in one or more financial reports, meaning that any gain or loss on asset re-evaluation must be recalculated and declared.
The gain or loss is declared all at once, on the effective date of the modification.
This procedure outlines recording a termination option that meets one of the following conditions:
The procedures for the two use cases are identical. The only difference is that in the second case, the Lease Manager exports lease costs to the general ledger, the export will contain extra line items representing a gain or loss.
Field | Value |
---|---|
Option Type | EARLY TERMINATION |
Is reasonably certain? |
Yes |
Area Involved | 100,000 sqft, for example |
Date Exercising Applicable | 1/1/2019, for example. Use the Date Exercising Applicable, as this option may not have been exercised yet. When it is actually executed, you can complete Date Exercised. |
Field | Value |
---|---|
Cost Category | RENT - BASE RENT |
Period | Month |
End Date | Enter the new end date of the lease. |
Amount - Expense | Retain the existing value. The cost change will be reflected in the new End Date. |
- If there are any allowances included as part of this termination option, enter them as separate costs with a Cost Category of LEASE - IMPROVEMENTS. Use Amount - Income rather than Amount - Expense for the cost.
- If there are other fees or costs that are permitted to be amortized over the entire lease, enter them in separate costs with Cost Category LEASE - OTHER AMORTIZED COSTS.
When the organization actually executes the option, the Lease Administrator additionally edits the Date Exercised (above, the classification uses the Date Exercising Applicable).
The Audit Log shows any changes to the options.
The Audit Log shows the new values of the Lease as of the Lease Manager's approval.
The Options table shows the modifications and the effective dates.
The amortization schedule includes:
It is the difference between the two schedules that the program uses to calculate the gain or loss.
Copyright © 1984-2019, ARCHIBUS, Inc. All rights reserved. |