Selections tab (System Options) – EZLease Success Center

Accounting Methodology

Select US GAAP (FASB) if you comply with U.S. FASB accounting standards (FAS 13/ASC 840 & ASC 842 for lease accounting), IFRS for international standards (IAS 17 & IFRS 16 for lease accounting), or GASB for U.S. governments (FAS 13 & GASB 87 for lease accounting).

Number of Separate Years in Future Rent Commitment Report

For compliance with FAS 13’s future rent commitment disclosures, you need to report the future rents by year for the first five years, then combine all future years as “Thereafter.” ASC 842 requires a minimum of five years separately. Sometimes companies wish to show a different number of years separately. Select the number of years you want reported separately.

Default Amortization Method

Most companies use straight line amortization. However, if you normally use a different method that EZLease supports, you may select it here and all new leases will automatically have that method. (You may always change the method for an individual lease.)

When you change the default amortization method, you are given the option to change the amortization method of all leases in the current database to the new default.

For more on the amortization method field, including a description of different amortization calculation methods available: Amortization method

Accrual Calculation Method

If amortization is calculated monthly, then each month has the same amortization, no matter how many days it has. If amortization is calculated daily, then each day is treated equally; if you have straight line amortization, every day of the lease has the same amortization. Generally, monthly calculations are best if your fiscal periods are whole months or multiples of whole months (quarters, years). If your fiscal periods are day-based (such as 4-week periods, 4/5/4-week periods, etc., where the last day of the period is a constantly changing day of the month), daily calculations are best. If monthly calculation is chosen, no amortization is recognized on the 31st day of a month; all months are considered to have 30 days (in February, an extra two days of amortization is applied on the 28th, or one extra day on the 29th in a leap year). This is a “360-day year” methodology; see below to apply the same methodology to rent and interest.

This choice is also used for level rent calculations. It is not, however, used for the calculation of cash rent accruals shown in the Income Statement/Balance Sheet Detail report.

Rent Commitments By

The future minimum rent commitment reports show rent due for the next five “years” by year, then all remaining rent in the “Thereafter” group. (The number of years can change from five if selected in Number of separate years in future rent commitment report above.) You can choose whether a “year” should be defined as 12 months from the end date of the report, or as the next fiscal year end (as set below). So, if a report ends on June 30, and you have fiscal year ending 12/31, a selection of 12 Months will cause the first year of the minimum rents to include 12 months of rent, while selecting Fiscal Year will cause the first year to include 6 months. Years 2 through 5 always include 12 months of rent, but the start and end of the year are derived from the end of the first year.

360 Day Year for Rent & Interest Accrual

This option is only available if the Accrual Calculation Method is Month. If selected, accrued rent and interest expense are calculated using 30-day months (with no activity on the 31st day of a month), which makes the daily activity the same whether a month has 30 or 31 days. If not selected, accrued rent and interest are divided evenly over the number of days in the current calendar month. Checking this option makes for more consistent recognition of rent accrual, including operating rent expense on non-leveled leases, when leases are paid in the middle of the month but your normal report period end date is the end of the month.

Display Executory Cost Types Separately in Future Rent Report

If checked, the spreadsheet output of the Future Minimum Rents report (and the Min Rent tab of the Income Statement/Balance Sheet Detail report) lists each executory cost type separately. If unchecked, all executory cost types are combined. All types are always combined on the text output format, due to the more limited space available. If only one executory cost type is currently displayed (specified on the Text tab of System Options), this option is disabled.

Report Lease Incentives Separately from Rent

FAS 13/IAS 17: If checked, the amounts in Lease Incentives (on the Inception tab; previously called Tenant Allowance) are amortized separately from rent, with their own accounts for income and balance. If unchecked, the lease incentives are subtracted from the overall operating rent due over the life of the lease, reducing the level rent recognized each period.

In ASC 842/IFRS 16/GASB 87 reporting, the lease incentives are automatically included in the Right-of-Use asset, and this option has no effect.

Include Future Leases in Future Minimum Rent Commitments

If checked, a lease that has a booking date before the report end date but a begin date later than the report end date will be included in future minimum rent commitment reports. If unchecked, such leases are ignored; only leases active as of the report end date are included.

Please note that you must change the booking date on a lease before this selection will have any effect, as the booking date by default is the same as the lease’s begin date. The goal is to allow you to indicate when you know early that a lease is starting, while still allowing reports to be rerun as of a particular date after you have added later leases, without changing your original report results.

Smooth Rent Leveling

The deferred rent liability or asset for an operating lease with leveled rents is the difference between the cash rent paid and the level rent accrued. If this box is checked, “cash rent paid” includes a prorated portion of the rent payment if the report period begins or ends in the middle of a rent payment period. If this box is unchecked, cash payments are counted in full on the day of the payment. If you have fiscal periods that do not regularly end on the same day of the month, the latter method can cause the deferred rent balance to swing substantially from period to period, depending on whether the period ends just before or after a payment is made.

Separate Level Rent from Operating Rent

Normally, the level rent expense for a lease includes both the current cash rent and the adjustment for leveling. For instance, in the Journal Entries report, the entry for an operating rent payment for a lease with level rent normally shows a debit for the entire level rent expense, a credit for the rent payment, and a debit or credit for the activity in the deferred rent account (depending on whether the period level rent or the cash payment is larger). Some users prefer to see the expense separated out between the “ordinary” rent expense associated with the current cash payment and the portion of rent expense that represents the leveling. Selecting this option will cause the journal entries report to show separate expense lines for the current cash and the level rent. The Income Statement/Balance Sheet Compact Report will also show the level rent as just the difference between cash and level rent. The Income Statement/Balance Sheet Detail Report always shows separate numbers for total level rent accrued and the deferred rent change, which is the difference between total level rent and cash rent.

XML Spreadsheet Output

If unchecked, spreadsheet output from reports is in the form of Excel spreadsheets using the .xls or .xlsx format. If checked, spreadsheet output is created using the .xml spreadsheet format. Output to .xls/.xlsx spreadsheets requires a licensed copy of Excel on your computer, whereas XML output does not require any other software on your computer. Non-Excel spreadsheet applications such as OpenOffice Calc can read XML output, as can Excel itself. XML output has less formatting than .xls output, but the data is identical.

Report Amortization After Lease Expiration

If checked, allows reporting which tracks amortization after lease expiration on

leases with amortization over the economic life (leases with ownership transfer or reasonably certain purchase option). You may run the “Depreciation over Economic Life” report, the finance lease amortization schedule will include post-expiration amortization, and you are permitted to enter an early termination date after lease expiration but before the end of the economic life.

Descending Asset and Obligation Balances in Amort Schedule

If checked, the Amortization Schedules - Finance Lease Report shows the net asset (gross asset minus accumulated amortization) and remaining obligation. If unchecked, it shows the accumulated amortization and cumulative obligation paid.

Descriptive Fields in All Spreadsheet Output

If checked, every spreadsheet report contains the description, Lessor name, asset class, financial group, and four user-defined fields, normally at the end of each row (in many cases, though, the description is automatically part of the spreadsheet format, and found at the beginning of the row; if so, it is not repeated at the end of the row). This is intended for ease of sorting and selecting data in Excel.

Configuration Options

Use this button to set special configuration options for EZLease. Please use this under the guidance of EZLease Technical Support.

In the Configuration Options window, enter the tag name for the option. If it already exists, its current value is displayed. Enter the new value desired, then click Store to save. Options are stored immediately; clicking Cancel in the System Options window does not undo changes.

Selections tab for the Lessor workspace

Manufacturer/ dealer (Lessor only)

For both ASC 842 and IFRS 16, manufacturers and dealers account differently for the profit from a sales-type (ASC 842) or finance (IFRS 16) lease. While other lessors show a single Sales Profit line, manufacturers and dealers separately record a debit for Revenue and a credit for Cost of Goods Sold. The net of those two entries equals the Sales Profit that other lessors record. Check the box for this accounting, which is shown on the Journal Entries, Income Statement/Balance Sheet Detail, and Disclosures Table reports.

Depository/ lending institution (Lessor only)

According to ASC 942, depository and lending institutions which are lessors include principal payments from sales-type and direct financing leases in their cash flow statement under investing activities. All other lessors include principal payments, along with all other lease payments, in operating activities. Check this box if you are a depository/lending institution which complies with ASC 942; the Disclosures Table report shows in the Cash Flows section a separate line for the principal payments as investing activities.