Associate fixed assets with leases

  • 6 minutes

In the process for creating a new lease, you can also associate the new lease with an existing fixed asset. By doing so, the right-of-use (ROU) asset value at initial recognition will go to the acquisition cost of that fixed asset.

Before associating a fixed asset with a lease, you need to create the record for the fixed asset in the Fixed assets module. For more information, see Set up and create fixed assets. When a fixed asset has been created, follow these steps to associate that fixed asset with a new lease on the Lease summary page.

  1. Add a lease in Asset leasing > Leases > Lease summary.
  2. On the Add lease page, in the Fixed asset number field, select the asset that hasn’t been acquired.
  3. Fill out all other relevant information on the Add Lease page.
  4. Select Create schedules at the top of the page.
  5. Select Books and then select the book to create a schedule for.
  6. In the Action Pane, select Payment schedule > Confirm schedule.
  7. Select Initial recognition in the Function Action Pane.
  8. Select Asset leasing journal in the Journals Action Pane.
  9. Select Journal details.
  10. Select Lines to view the lines for the journal entry.
  11. Post the journal.

Screenshot of the create schedules page.

To view the transaction table, go to Fixed assets > Fixed assets > Fixed assets and then select Valuations. You should see the acquisition transaction that was created by the initial recognition journal entry for the specific fixed asset that was used. Updating an asset record from Fixed assets that is from a transaction in Asset leasing will synchronize automatically because of the Asset ID in the initial recognition transaction.

To further use the synchronization between Fixed assets and Asset leasing, turn on the Pass service life from Asset leasing to Fixed assets feature in the Feature management workspace. When the feature has been enabled, it will automate the process of passing the service life of a fixed asset from Asset leasing to an asset book.

When the initial recognition journal entry has been posted, you can depreciate the fixed assets by using standard depreciation methods in Fixed assets. When a fixed asset is associated with a lease, the Service life field in the fixed asset book will be updated automatically to align with the smallest value from one of the following entities:

  • Asset’s useful life
  • Lease term from associated lease book

Additionally, if the Transfer of ownership field is set to Yes in the lease book, then the value in the Service life field will always default to the asset’s useful life. This process ensures that the Service life is updated whenever an adjustment has been made to the lease so that the right-of-use asset is depreciated over the term lease.

The Lease ID that is connected with a fixed asset will be displayed on the Fixed assets and Fixed asset book pages. If a fixed asset relates to a lease, the Lease ID and Lease description will be shown in the Fixed assets page on the Lease information FastTab. For fixed asset books that are related to lease books, the Lease ID, Lease description, and Book type fields on the Lease information FastTab will display information for the selected fixed asset book to indicate that it is associated with a lease book.