Often a lease is renewed or extended (that is, the same asset is leased for an additional period of time). The best way to handle entry of the extension varies depending on the circumstances:
Option is exercised that was previously entered on the EZLease record (which was not previously marked as Recognized):
Check the Recognized (or Contract, if you use that) box for the option. Save the lease, choosing Revise; set the Revision Booking Date to the date the option was officially exercised (notice given to the lessor, or paperwork signed); set the Revision Incremental Borrowing Rate to the rate as of the Revision Booking Date. If the lease is Finance or ASC 842 Operating, the asset and liability are adjusted at that date by the increase in the present value of the remaining rent. If the lease is a lessor operating lease (or FAS 13/IAS 17 operating), any rent leveling is extended over the remaining life of the lease.
Option is exercised that was previously entered on the EZLease record (already marked as Recognized):
No change is necessary. If you wish, you can check the Contract box for the option, which is used only for optional reporting of future rent commitments according to whether the contract has been signed rather than according to whether the option is reasonably certain to be exercised. (This is a non-GAAP reporting option for the Future Rent Commitments report only.)
Option not previously entered; no change in the terms of the lease for the remainder of the existing life, done near the end of the original lease:
You may choose whether to extend the existing lease (either change the end date, or add an option which is immediately marked as Recognized), or to create a new lease for the renewal period.
Option not previously entered; terms of existing lease change, or extended time remaining until expiration:
Revise the existing lease with the new end date and new terms. Use a revision booking date of the last day of the original lease term.
Note: Once a lease is expired, it is taken off the books and cannot be updated. In this case, the renewal term MUST be set up as a brand new lease.