Adding Leases

Enter the Lease Number and a Description.

Note: The Description field is optional, but highly recommended.

Typically, you should leave the Classification drop-down as To Be Classified, which allows the system to classify the lease.

If you want to explicitly classify the lease, select the appropriate classification.

Select the Begin Date (lease start date) and Base End Date (lease end date).

Note: If you don’t know the end date, you can double click the Base Term field, enter the lease term in months and then click OK and it will auto-calculate.

If this is a User classified finance lease, enter the Discount Rate as a percentage.

Example: 10% would be entered as 10.

Verify the Depreciation Method is correct and change if necessary.

Verify the Depreciation Life is correct and change if necessary.

Note: A capital lease should be depreciated over its economic life if it has an ownership transfer or reasonably certain purchase option at the end of the lease. Otherwise, it should be depreciated over its lease term.

In the Current Economic field, enter the estimated economic life of the asset in months.

In the Rent steps table, enter the gross rent due for each payment, per full payment period in the Gross Rent field. Be sure to include any executory costs and non-lease components but exclude variable lease payments.

*Add something about Rent Escalation feature here. Lease -> Rent Escalation

System automatically computers a percent/dollar rent increase and generate rent steps in the background…In the pop-up window, specify start/end dates, frequency, initial amount, increase %/$

If there’s an executory cost included in the Gross Rent, enter that amount in the Exec cost #1 field. If the Gross Rent is negative, any executory costs must also be negative.

You may choose to combine all executory costs into a single amount or enter up to five different executory costs (to see those columns in the table they must be configured in System Options on the Text tab).

Note: Do not enter executory costs which you pay directly to a third party, rather than through your rent.

If there are multiple rent steps, use the last row in the table to continue adding those amounts and make sure to adjust the Step End dates and Pym Frequency accordingly.

Note: You may enter an unlimited number of rent steps. They can be entered in any order and then sorted by the Step End date.

Click the Inception tab.

If this is a system classified lease (meaning you left the Classification as To Be Classified), enter the Incremental Borrowing Rate (IBR).

Enter the fair market value in the Fair Value of Building/Equipment field.

Note: This field is not required if the lease is user-classified operating or capital. If it is part land and part building, enter the building portion here and the land portion in the Fair Value of Land field.

If it is not possible to determine a fair value for an asset, leave the Fair Value fields blank and check the Far Value Not Determinable box.

If the lease is partly or completely land, enter the fair value of the land portion of the leased assets in the Fair Value of Land field.

Note: This field is not required if the lease is user-classified operating or capital.

Update the Original Booking Date, as needed. This field determines when the lease entries will appear in reporting. By default, the Original Booking Date is the same date as the Begin Date.

If you need the lease to be recognized for reporting purposes as of a different date, enter that date in this field.

Note: 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. If the lease is signed but use of the asset is delayed to a later date, enter a date earlier than the Begin Date.

If the lease agreement conveys ownership to you at the end of the lease term, check the Ownership Transfer box.

Note: If you user-classify the lease operating, this box cannot be checked.

For ASC 842/IFRS 16, if you have an option to purchase the underlying asset and are reasonably certain to exercise (not limited to reasons of option price), check the Reasonably Certain Purchase Option box and on the Main data tab, enter the purchase price in the Lessee’s Guaranteed Residual field.

If you are renewing a lease or leasing a used asset and previous use of the asset has covered 75% or more of its original economic life, check the Last 25% of Economic Life box.

If the payment is made at the end of the period (payments in arrears), uncheck the Payments in Advance box.

If you have additional information such as initial direct costs, lease incentives, etc. enter it in the appropriate fields.

Reminder: For additional information about any field, click in the field and press F1 on your keyboard.

Click the Term/Options tab.

In the Renewal options table, check the Recognize 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, ¶5f.

Note: EZLease automatically checks the boxes of earlier options or unchecks the boxes of later options when you check or uncheck this box.

If the contract has been signed for the option, check the Contract box.

Note: 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.

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.

By default, the first option runs for five years. Change the End date as needed.

Note: After you set the first option’s end date, the next option by default has the same length as the option preceding it.

If you leave the Notice box 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).

Click the Descriptive tab.

The Lessor information fields are optional but completing them will allow you to select leases to report on based on Lessor name.  

The Asset Class and Financial Group fields can be used for selecting subgroups of leases for reports. If you choose to use this functionality, enter the desired information (up to 50 characters).

Note:

The user-defined fields can be used to hold whatever information you want (up to 100 characters each).

Note: You can select leases that contain particular entries in any of these fields when you run reports. These fields are also configurable if you would like to choose from a list of values. (Refer to User Guide – Configuring System Options for additional detail.)

You can use the user-defined date fields to store additional dates. This allows you to select leases that match the date shown when you run reports.

Do you need to add any attachments to the lease record?

If you wish to add a memo to the lease record, click Add/Edit Memo. Enter the appropriate information and then close the window. You’ll receive a prompt to save or discard the changes. 

Example: You can capture who is responsible for the lease, any arm’s-length renewal options (not included in the original lease term), or anything else you deem necessary.

The Last Update: and by: fields show which user most recently made changes to this lease, and on what date.

Click the Acct Numbers tab.

From the Account Group drop-down, select an existing account number group or leave the field blank. You can manually customize the account numbers for this lease by checking the Customize checkbox and entering the appropriate account number(s).

Note: For variable lease payments, the Var payments field is used in reporting for the cash credit. The other seven fields are for the debits to various expense accounts.

Is there an existing account number group you wish to use for this lease?

Click the Account Group drop-down.

Select the appropriate account number group from the list.

Do you need to change any of the account numbers?

Go to the Variable tab.

Which of the following do you need to enter?

Enter the amount of the variable payment in the appropriate field.

Enter the date the variable payment is made in the Pmt Date field.

Note: If you specify a date when no rent is scheduled to be paid, EZLease finds the closest rent payment date and offers it as an option. Because variable payments may happen out of cycle with the regular payments, you can choose to keep the date you entered.

If you need to enter additional variable payment amounts, use the last line to create them. Make sure to enter amounts in the correct fields and adjust the Pmt Date accordingly for each payment.

Click the ARO tab.

Click the Add ARO icon.

Result: The ARO tree appears, which contains a layer.

Do you expect to retire the asset in stages and settle the ARO at each step?

Enter the ARO Name.

Select the appropriate Depreciation Method.

If the ARO is known but not required, you can uncheck the Required? box.

Note: If unchecked, values for the ARO will be calculated and displayed on screen, but not included in any actual reports.

If desired, enter a Layer Name.

By default, the Display End Notice box is checked, and the Notice Dates report will display a notice when the ARO is approaching its scheduled end date (if enabled in System Options).

Note: You may uncheck it if you don’t need to see the notice on the report.

For the Begin Date, enter the date the retirement obligation was identified.

Note: This date cannot be earlier than the lease Begin Date.

For the Booking Date, enter the date the ARO should be recognized on your books.

Note: This date cannot be earlier than the lease Begin Date.

Do you want to specify the ARO end date as a number of months (useful life) or as a particular end date?

Enter the assumed inflation rate between now and when the ARO will be satisfied (at the end of the lease or use of asset) as a percentage in the Inflation Rate field.

Enter the credit-adjusted risk-free borrowing rate for present valuing the ARO from the end of the lease to the present as a percentage in the Credit Adjusted Risk-Free Rate field.

If the requirement or cost is uncertain, you may enter a Probability of less than 100%.

This can be used either to reflect a possibility that the ARO will not need to be paid, or a range of estimates. (E.g., 30% chance of $10,000, 50% chance of $15,000, or 20% chance of $25,000)

Enter the current cost to remove the asset in the Current Cost field.

Note: Alternatively, you can enter the expected future cost and specify an inflation rate of 0%.

If you need to set up the ARC asset at inception at a different value than the ARO liability, enter the amount by which the asset should vary from the liability in the Asset Adjust field.

Example: If the liability is $10,000 and the asset should be $8,000, enter -2,000.

Click the Notice Dates tab.

Enter the desired notice Description.

Select the appropriate Notice Start and Notice End dates to indicate when it should be included in a Notice Dates report.

By default, the Display box is checked, and the notice is included in the Notice Dates report.

Note: You may uncheck it at any time if you no longer need to see the notice on the report.

The Display End Date Notice box is also checked so EZLease will notify you when the lease expiration is approaching (if configured in System Options).

Note: You may uncheck it if you do not need this notification.