Adjust a lease

  • 5 minutes

For companies that adhere to ASC 842 or IFRS 16, when lease terms are modified or a lease is extended, adjusting the lease is required.

Follow these steps to adjust a lease:

  1. Go to Asset leasing > Leases > Lease Summary and select the lease that requires modification.

  2. In the Action Pane, select Adjustment wizard. When the lease opens, you will receive a message that data will be updated after the create schedules process has run.

    Screenshot of the Adjust lease option, showing the Lease details.

  3. Make required modifications.

  4. In the Action Pane, select Create schedules.

    Screenshot of Create schedules in the Action Pane.

When the create schedules job is run, Finance recalculates the adjusted value in the lease. To view the modified schedules, go to the Lease summary page of the lease. In the Schedule pane, to view the calculated interest expenses, select the Liability amortization schedule page. To view calculated straight-line depreciation, open the Asset depreciation schedule page.

Lease versions

If a lease has been adjusted, you can view the different versions of the lease, historical schedules, and past lease details.

To view the versions of a lease, follow these steps:

  1. On the Lease summary page, select the lease and then, on the Action Pane, select Lease version history.

    If the selected lease has been adjusted, the Lease version history page shows the different versions. The original lease is labeled 1, and subsequent versions have ascending numerical order.

    For a selected lease version, you can view the financial dimensions, contract details, location, and payment schedule lines.

  2. To view historical schedules, open the modified lease from the Lease summary page, select the desired book, and then select Book version history on the Action Pane.

  3. On the Book version page, select a version and a schedule to view.

Lease book status

After you close a lease book, you may need to post an adjustment that represents a lease adjustment. To make the adjustment, you will need to reopen the corresponding book that is closed, this way, you don’t have to create a new lease contract when an existing contract is extended. You can reopen a closed lease book by using the Reopen lease status function on the Book details page for a book.

Screenshot of the Reopen lease status function on the Book details page.