Field |
Definition/Format |
(Early Termination Type) Normally entered as a modification, rather than as part of the initial input. If a lease should be removed from reporting before its originally scheduled expiration, early terminate it. There are four termination options: Early Termination means that the lease is ended early; income statement activity ends as of the date specified, and all balance sheet amounts are removed, with a gain or loss taken for the difference between assets and obligations. Transfer Termination is almost the same as Early, but is intended to be paired with a transfer addition on another lease. See Transfer Addition, for more details on this transaction. In order to pair the leases up and not double-count activity, no activity is recognized on a lease on the date of a transfer termination (the activity of that day is recognized on the transfer addition). Correction is used by EZLease to indicate a mid-life adjustment; you may not select Correction as a termination type yourself. (If you used Correction on a lease before EZ13 v4.0, the type is changed to Reversal during the database update to v4.0 or later.) Reversal reverses all activity from lease inception to date; the net effect is as if the lease was never on the system, but the reversal is booked on the date of the termination, so that prior reports are unaffected by the removal of the lease. You can then replace the lease with correct information, if appropriate. Reversal is used by EZLease if a change to a lease switches its classification from operating to finance or vice versa. |
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Early Term Date |
(Early Termination Date) Normally entered as a modification, rather than as part of the initial input. This is the date a lease should be early terminated. An Early Termination Date that is the same as the Effective End Date is ignored if the termination type is Early Term. |
Sometimes leases are renewed after expiration on a month to month basis. There is no future rent commitment; the rent is expensed as incurred. To treat a lease as month to month, check the Month to Month at Termination box and enter the end date for the MTM extension. Rent for the month to month period must be entered as variable lease payments. (Regular rent ends when the lease expiration date is reached.) Each payment is entered separately. You can do a whole-database update of the MTM extension:
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Keep Asset On Books While MTM |
Check this box if you wish to keep the Right-of-Use asset and accumulated depreciation on the books while the lease is active as a month to month lease. Normally the Right-of-Use asset and accumulated depreciation at lease expiration are equal, so the net asset is zero whether or not this box is checked. |
You may enter the amount you pay the lessor at the end of a lease, such as in satisfaction of a guaranteed residual. This affects the calculation of the termination gain or loss. | |
Some lessees receive the benefit if an asset is sold after the expiration of the lease for a price higher than the value expected at the lease commencement. If you check Sale At Termination, you can enter the Sale Date, the Payoff Amount (what you pay the lessor at sale), and the Sales Price. The excess of the Sales Price over the Payoff Amount is treated as a termination gain (if the Sales Price is less, a loss is recognized). | |
Sale Date |
The date on which the sale occurred. |
Sales Price |
The excess of the Sales Price over the Payoff Amount is treated as a termination gain (if the Sales Price is less, a loss is recognized). |
Recognize |
Check this box if the option should be included in the minimum lease term because it has already been exercised, exercise is “reasonably assured,” or it meets the other criteria of FAS 13. EZLease automatically checks the boxes of earlier options or unchecks the boxes of later options when you check or uncheck this box. |
Contract |
Check this box if the contract has been signed for the option. You can optionally determine the lease term for the Future Minimum Rents report based on this setting rather than the normal Recognize box. (Please note that this is a non-GAAP presentation.) If this box is checked, Recognize is automatically checked. EZLease automatically checks the boxes of earlier options or unchecks the boxes of later options when you check or uncheck this box. |
Begin |
The begin date of the option is set automatically. The first option begins the day after the Base End Date of the lease. Each additional option begins the day after the prior option ends. |
End |
By default, the first option runs for five years. Change the date as needed. After you set the first option’s end date, the next option by default has the same length as the option preceding it. |
Notice |
If this box is checked, the Notice Dates report will display a notice when this option is scheduled to expire, just like the expiration of a lease (assuming that you have set the System Option to display expirations in the report). |
A leased asset becomes impaired if a change in circumstances indicates that you can no longer reasonably expect to gain substantial value from using it. For instance, you may close a store location, but not be able to terminate the lease. An impairment may be full or partial. An impairment results in a loss which is added to the accumulated depreciation. If the impairment is partial, additional impairments may be recognized later in the lease life. Reversing an impairment is not supported. For an ASC 842 operating lease, after an impairment, any remaining asset is depreciated on a straight-line basis “unless another systematic basis is more representative of the pattern in which the Lessee expects to consume the remaining economic benefits” [842-20-25-7]. EZLease honors the Depreciation Method chosen for the lease to depreciate the remaining asset. In the Impairments table, enter the effective date for an impairment, which should be in the current fiscal period. For the value, you have two choices:
EZLease does not tie impairments to a specific revision. |