Field |
Definition/Format
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Required. By default, this is the same date as the Begin Date. You may enter a different date to cause the lease to be recognized for reporting purposes as of a different date. Use a date later than the Begin Date if you didn't receive the information on the lease until later, and reports were run for intervening periods. Use a date earlier than the Begin Date if the lease is signed but use of the asset is delayed to a later date. If the Booking Date is later than the Begin Date, then the lease is first reported in a report that includes the Booking Date, at which time all activity from the Begin Date to the present is booked (“catch-up accounting”). If the Booking Date is earlier than the Begin Date, and the system option “Include future leases in future minimum rent commitments” is checked (see chapter 5, System Options), then a report that ends on a date between the Booking Date and the Begin Date will include the lease in the future minimum rent commitments, but not on the income statement or balance sheet. |
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The date on which changes that are made to a lease will appear in reporting. This is only applicable when choosing "Revise" to make your changes. |
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Required unless lease is user-classified. Your company’s incremental borrowing rate, as of the inception of the lease: “the rate that … the Lessee would have incurred to borrow over a similar term the funds necessary to purchase the leased asset.” This information is typically available from your company’s treasurer’s or controller’s office. Enter the rate as a percentage (for example, 8 percent is 8.000). |
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Applies only to leases that are operating under FAS 13/IAS 17. This is the incremental borrowing rate at the transition date (the date the lease transitions from the old standard to the new, usually 2017 for U.S. preparers and 2018 for IFRS preparers). The lease will be capitalized using this rate as the discount rate for the lease (the Right-of-Use asset and initial liability will be the present value of the rents at this rate, with possible adjustments to the asset for rent leveling, prepaid or accrued rent, and initial direct costs). |
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Required. Enter the estimated economic life of the asset in months. If the lease term is 75% or more of the economic life, the lease is finance (unless the leased asset is in the last 25% of its economic life at the inception of the lease). The Economic Life used is typically the period over which you would depreciate the same type of asset if it were owned instead of leased. If the lease is land only, you may leave this field blank, since land is normally considered to have infinite life. If the lease transfers ownership or has a reasonably certain purchase option, the lease is depreciated over the Economic Life, rather than over the lease term. If the Economic Life is longer than the lease term, at expiration you will have an unamortized balance in your asset account, which typically is transferred to your owned asset account. It can be tracked using the Depreciation over Economic Life report. You may enter the economic life directly, or if the asset was previously in service, you may enter an in-service date and the original economic life, in which case EZLease will calculate the remaining life, and automatically determine if the lease starts in the last 25% of the asset's economic life. |
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Required unless the lease is user-classified operating or finance. If the lease is a building or equipment, enter the fair market value of the leased property. If it is part land and part building, enter the building portion of the fair value here. See Fair Value in chapter 2 for more information on determining the proper fair value. If a lease is partly for real estate (land and/or building) and partly for equipment, the real estate and equipment portions must be accounted for separately under two different leases. If you usually capitalize sales tax charged on purchased assets, then sales tax on a lease should be capitalized (if the lease is finance) by adding it to the equipment’s Fair Value and excluding it from executory costs. If you initially set up a lease and later need to “true up” the asset value (such as after construction is complete), change the fair value and then choose Revision when saving the lease. The revised fair value is used from that point forward without changing previously booked activity; this means that the receivable can increase and/or the interest rate may change. You should not change the fair value in this field to reflect an unaltered but differently valued asset at the time a lease is renegotiated or extended; that fair value should be entered in the “Values at time of revision” box below. |
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Required unless the lease is user-classified operating or finance. If the lease is partly or completely land, enter the fair value of the land portion of the leased assets. For FAS 13, if this is 25% or more of the total fair value (i.e., 1/3 or more of the value of the building), the land portion is always operating (unless there is an ownership transfer or reasonably certain purchase option), and the Annual Land Rent Portion is calculated automatically by EZLease. If there is an ownership transfer or reasonably certain purchase option on a part land/part building lease, you must enter the lease as two separate records in EZLease, because the land should not be depreciated while the building should. If a lease has an entry in the Fair Value of Land and no entry in Fair Value of Building/Equipment, the lease is considered “land only” and is always operating (unless there is an ownership transfer or reasonably certain purchase option, which is extremely rare). If the land is less than 25% of the total value, the lease is considered as a unit, and is fully finance or fully operating based on the combined value. While FAS 13 does not explicitly state so, some accountants interpret it to allow splitting up the land and building portions for all leases, even those with small land values; they consider that combining land and building components is offered to simplify the process, but not required. If you wish to treat the land portion as operating when less than 25% of the whole fair value applies to the land (and the overall lease is finance), you must enter two separate leases in EZLease, one for the land and one for the building. For ASC 842 reporting, you must set up two separate leases if you want the land portion treated as operating, no matter what percentage the land is.
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Required. In some cases, it may not be possible to determine a fair value for an asset. FAS 13, ¶28, particularly envisions a lease of a part of a building (such as a suite of offices, a floor, or a store space in a mall). In such a case, check this box and leave the Fair Value fields blank. If this box is not checked and nothing is filled into either of the Fair Value fields for a system-classified lease, you will get an error. |
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| Usually, land should be classified as operating, while a building may be either operating or finance depending on the lease terms. EZLease requires finance building and operating land leases to be entered as two separate records. However, ASC 842-10-15-29 permits combining the land and building if “the accounting effect of doing so would be insignificant.” To do so, check this box. | |
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If the lease is finance (or ASC 842 operating), once you save the lease, the Right- of-Use asset is calculated and displayed. When a finance lease is revised, the Right-of-Use asset is recalculated, even if the original Right-of-Use asset was specified. (Both the asset and liability increase or decrease by the change in the present value of the remaining rent.) Each revision of a lease will show what the Right-of-Use asset was while that revision was in effect. |
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Total Rent Payments |
A sum of all minimum rent payments, finance, operating, executory, and non-lease components. Variable lease payments (contingent rents) are not included, nor are rents for non-recognized option periods. |
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On operating leases that have rent leveling, the periodic level rent accrual amount is displayed. The period length is the one chosen for the system option Accrual calculation method (typically Monthly for users with calendar month-based fiscal periods, Daily for users with fiscal periods that are day- or week-based). If a lease does not have operating rent leveling (either because the lease is finance, or it has the same rent for the entire life of the lease, or rent leveling has been turned off), zero is shown. This value is not shown when you choose ASC 842/IFRS 16/ GASB 87 classification display. |
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The interest rate implicit in the lease, based on both the rent stream and the unguaranteed residual. This is often not known by the Lessee. This is calculated by EZLease if you enter the Unguaranteed Residual (next) and a Fair Value. Under ASC 842/IFRS 16/GASB 87, the Lessor's Initial Direct Costs are also part of the calculation of the implicit rate, and if they are unknown, the implicit rate is not calculated or used. If the implicit rate can be calculated, it is used as the discount rate for the lease. |
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Normally, you should allow the system to classify the lease. However, in some circumstances, you may want to explicitly classify the lease one way or the other. If you specify the classification, How Classified is set to User; otherwise, it is System. |
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Lease Type |
Required. This is always “Lessee lease.” |
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Gross Rent is the entire rent payment due for each payment period. Executory Cost are costs such as insurance, maintenance, and taxes incurred for leased property, whether paid by the Lessor or Lessee. Non-lease Components are amounts included in the rent paid to the lessor which transfer to the lessee a good or service separate from the underlying leased asset. Step Start is the day after the previous step end. Step End is the day the rent step ends. |