Life Cycle Events
Many events may occur during the life of a lease. LeaseAccelerator has the ability to capture these events as they happen. These life cycle events may include:
Payment Adjustments
Deal Modifications
Impairments
Related Expenses
Download a PDF version of the guide.
Payment Adjustments
Payment Adjustments may be captured for an existing deal two ways:
Through the User Interface in Deal Summary
Using the Bulk Import function
To capture a payment adjustment through the UI, search for a deal using the deal number and Top Search Bar. Once in the deal, hover over Record Event in the Left NavBar. Next hover over Record a payment, then Change a payment. From this layer of the menu, there are different options, depending on what the timing of the adjustment is and the reason for the adjustment. By selecting any of the options, you’ll be taken to the Record Payment Adjustment Workspace and some fields will be pre-populated based on the selection in the Record Event menu.
The reason code used determines if that lease will be remeasured or not when you make that adjustment. If you are expecting a remeasurement for ASC 842, the only time that will happen is when you have a recurring contingency resolved. All other types will not remeasure. For IFRS 16, remeasurement will occur when you have recurring payment adjustments for either a contingency resolved or a change in the underlying index.
Follow the steps below to record a payment adjustment:
Step |
Action: Record Payment Adjustment |
|---|---|
1 |
Search for deal using the Top Search Bar and Deal #. |
2 |
Hover over the Record Event menu in the Left NavBar. |
3 |
Hover over Record a payment, then Change a payment. |
4 |
Now hover either Record one-time payment change or Record recurring payment change. |
5 |
Select either Underlying index rate change, Contingent rent resolved, or Other, as appropriate, and you will be taken to the Payment Adjustment workspace. |
6 |
Within this workspace, some fields will pre-populate based on the selection you made in the Record Event cascading menu. |
7 |
For Change Payment starting on, change the date from the current date to a valid payment date. You may refer to the payment schedule shown in the workspace to verify that you have indicated a valid payment date. |
8 |
If you have indicated a valid payment date, the Scheduled Payment Amount will appear. If this is blank, check your date as it is not a valid payment date. |
9 |
Next enter the new payment amount. Please note that this is not the change in payment but rather the entire new payment amount. LeaseAccelerator does support one-time negative payment adjustments. To do this, enter – before the amount. |
10 |
If you selected a timing and reason that results in a remeasurement, you will see the Remeasurement Date where you can select the appropriate fiscal period. |
11 |
When all appropriate fields have been populated, click the Save Payment Adjustment button. |
12 |
The lease will be rebooked, and you will need to reload Deal Summary once the booking is complete to see the changed payment in the payment schedule. |
To capture a payment adjustment using the Bulk import function, follow the below steps:
Step |
Action: Bulk Import Payment Adjustments |
|---|---|
1 |
Download the most recent Portfolio Intake Workbook (PIW) from Ask Alex or the Success Center. |
2 |
Populate the Payment Adjustment tab. See below for an example. |
3 |
Navigate to the Bulk Import workspace from the Left NavBar. |
4 |
Select the Payment Adjustment tile. |
5 |
Click Choose File and select your saved PIW. |
6 |
Click Validate. |
7 |
Review any validation messages and correct as necessary. Remember, yellow warnings will not prevent import but red errors will and those must be addressed before finalizing import. |
8 |
Once all validation messages have been addressed, click Import to finalize. |
9 |
Import was a success when you receive green dots next to the schedule numbers. You may click on any of the schedule numbers to review the deal in greater detail. |
For more information on Payment Adjustments, please see the User Guide to Deal Changes.
Deal Modifications
Often times Lessees renegotiate or change the lease terms and conditions which were not contemplated in the original lease agreement. These changes include:
Change in term (duration)
Renegotiating payment (not a payment adjustment)
Adding assets
Removing assets or reduction in scope
Changing the reasonably certain EOT option or holding period
LeaseAccelerator provides a way to capture modifications that change the aspects of the deal in ways that require a new deal to be created and have significant accounting implications.
Note: Modifications are contractual changes. Taking actions on an existing lease using existing options (such as a Mid-Term Return) or changes to Payments based on the existing terms of a lease are not Modifications. These types of occurrences are managed through Asset Management, Payment Adjustments, Record Asset Event or Deal Summary.
Modifications may be made to active, renewed or evergreen deals in LeaseAccelerator by selecting the appropriate option in the Record Event cascading menu.
For more information on specific modification scenarios and steps to perform a variety of different types of modifications, please see the User Guide to Deal Modifications.
Terms Tile
The Terms tile outlines the existing terms and allows for renegotiated or modified terms to be entered. If your modification includes changes to any of the terms, populate this tile. Changes may include:
Periodic Payment Frequency
Repayment Mode
Periodic Payment Amount
Lease Rate Factor
Duration
RC EOT Options
Add Assets Tile
If the modification is due to adding new assets (i.e. taking new space in a leased building) during the term of a lease, you can use this tile to modify the deal by adding those assets. By clicking the plus sign, you can enter asset details in the pop-up.
Note: If the only modification you are performing is to add asset(s), the resulting deal with have a -A001 designation and will be coterminous with the original deal.
Remove/Reduce Assets Tile
Likewise, if the modification requires that assets are removed or leased space is reduced, you can make those modifications using the Remove/Reduce Assets tile.
Summary Tile
The Summary tile shows lease details Before Modification and After Modification to illustrate the effect of any changes. Before recording the modification, verify that all the data is accurate. Once you’ve verified all data and input necessary RCHP, indicate the Date of Modification, which will be the Lease Start Date of the new modified deal. Click Record Modification to submit the changes and create the modified deal.
Once the modification has been recorded, a new deal will be created. The original deal will not terminate until the new, modified deal has been classified and booked.
You will then be prompted to perform an accounting classification for the new deal.
Next you will need to book the new deal. Within the Deal History workspace, on the Next Steps tile, you’ll see a To-Do to Book the modified deal.
Click the Book button and populate appropriate fields in the Book Deal workspace.
Note: When booking the modified deal, be sure to book to the same ledgers as the original deal.
Your new deal is now booked and the modification has been captured. A deal relationship will be created between the newly modified deal and the original deal. This deal relationship may be viewed in both Deal History and Deal Summary workspaces on the Related Deals tile.
For more information about Deal Modifications, please see the User Guide to Deal Modifications, available in Ask Alex or the Success Center.
Impairments
Per FASB guidance, long-lived assets and certain identifiable intangibles held and used by an entity are to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment is appropriate, you can record either a full or partial impairment on one or more assets in the user interface using the Record Asset Event workspace.
Follow the steps below to record an Impairment:
Step |
Action: Record Asset Event |
|---|---|
1 |
Search for the deal using the Top Search Bar and Deal #. |
2 |
Hover over Record Event in the Left NavBar and select Record asset impairment from the first menu layer. |
3 |
This will take you to the Record Asset Event workspace where all assets are checked by default. You can uncheck any assets as necessary. |
4 |
Impairment is pre-populated in the Asset Event drop-down. |
5 |
Change Ledger Date to appropriate date. |
6 |
Change Impairment Date to appropriate date. This should be the last day of the fiscal month before the impairment takes effect or the first day of the fiscal month in which you want impairment to take effect. |
7 |
Enter any relevant comments related to the impairment. |
8 |
Enter the impairment amount. The impairment amount must be less than or equal to the net book value of the selected asset. If it is greater, you will get a pop-up warning indicating the maximum value that may be used. |
9 |
Click Save. |
For more information on Impairments, please see our User Guide to Impairments, available in Ask Alex and the Success Center.
Impairment Loss Reversal
According to ASC 840 and ASC 842, once an asset is impaired, it will always be impaired and cannot be reversed. However, under IAS 17 or IFRS 16, you may reverse an impairment after you have reviewed and tested the asset in much the same way as when you initially impaired it.
You may reverse an asset impairment loss in the user interface within the Record Asset Event workspace.
Follow the steps below to record an Impairment Loss Reversal:
Step |
Action: Record Asset Event |
|---|---|
1 |
Search for the deal using the Top Search Bar and Deal #. |
2 |
Hover over Record Event in the Left NavBar and select Reverse asset impairment loss from the first menu layer. |
3 |
This will take you to the Record Asset Event workspace where none of the assets are checked by default. Any impaired assets will be indicated. You may only check one asset at a time. |
4 |
Impairment Loss Reversal is pre-populated in the Asset Event drop-down. |
5 |
Change Impairment Loss Reversal Date to appropriate date. |
6 |
Verify the Ledger Date, change as necessary. This drop-down is limited by the Impairment Loss Reversal Date and open periods. |
7 |
Enter any relevant comments related to the impairment loss reversal. |
8 |
Enter the Impairment Loss Reversal Amount. Note: It is up to the customer to determine the maximum impairment loss reversal amount, LeaseAccelerator does not calculate this or alert you if you enter an amount greater than the maximum allowed. |
9 |
Click Save. |
For more information on Impairments, please see our User Guide to Impairments, available in Ask Alex and the Success Center.
Related Expenses
Ancillary expenditures that are required by the lease agreement or that have a direct impact on the accounting for a lease and are incremental to the base rent must be invoiced and/or paid before subsequent entries will be recorded. You may get to the Capture Invoiced/Paid Expenses workspace either from the Expenses tile in Deal Summary and clicking the Record Expenses button or by hovering over Record Event in the Left NavBar and Record a payment, then selecting Record invoice/paid expense.
Invoiced Expenses Tile
Any expenses that were entered either during schedule entry or from the Expenses tile in Deal Summary will appear on this tile under the Scheduled Expenses. If there have already been expenses that have been invoiced, either through this workspace or by using a bulk import for Invoiced Related Expenses, they will appear in the Invoice History section.
To add a new invoice, you may select one of the Scheduled Expenses and fields in the Enter Invoiced/Paid Expenses section will auto-populate based on that expense. If you are entering an invoiced expense that isn’t listed in the Scheduled Expenses section, you may still enter the invoiced expense information manually.
Once complete, click Save. The expense will appear in Invoice History if this is an invoiced expense that hasn’t been paid yet. If it has been paid, then it will appear on the Paid Expense tile.
Paid Expenses Tile
Any expenses that have been paid will appear in the Payment History section on the Paid Expenses tile. This includes any expenses paid using the user interface or the bulk import for Paid Related Expenses.
If an expense was paid by mistake or you need to delete a payment in an open period, you may click the trash can icon to delete the expense. If no trash can icon appears, then that expense was paid in a closed period and cannot be deleted.