NetLease - Run Monthly Short-Term/Long-Term Reclass
Use Case: All lease liability transactions are recorded within NetLease against the Primary Lease Liability account set up during configuration. This Lease Liability should be classified on the balance sheet as a long-term liability. On a periodic basis, a reversing journal entry is recorded and tagged to each lease. The journal entry reclasses the short-term portion of the lease liability from the long-term account to the defined short-term lease liability account. A second journal entry is booked for the subsequent day to reverse the reclass entry. When done on a monthly, quarterly, or annually basis, this correctly categorizes the short-term portion of the lease liability at period close. Note that this functionality is not supported for ASC 840, Short-Term, or Low-Value leases.
Prerequisite: All lease transactions that impact the lease subledger details (setup, modifications, impairments, terminations, etc.) should be completed prior to processing monthly lease journals. Additionally, the status for commenced leases should be updated to reflect a commenced status. The reclass of ST/LT lease liabilities typically also takes place AFTER the amortization entries.
Step By Step Process:
- Open to the Reclass Journal Entry Posting Page by navigating to NetLease > Process Monthly Transactions > Monthly Reclass Journals
- You are navigated to the NetLease Monthly Reclass Journal Processing page
- Select the appropriate filters to run the journal entries and select Save
Field | Description | Example |
Period | Highlight the period for which you would like to record transactions | Jan 2019 |
Reclass Journal Type | The Reclass Journal type defaults to Short Term/Long Term Reclass. Keep the type unchanged for that setting. | Short Term/Long Term Reclass |
| Lease Status | Select the Status of the leases to run reclass journals on. Except in catchup scenarios, one should just run reclass journals on commenced leases. | Commenced |
| Subsidiary | Select the Subsidiary for whom reclass entries will be recorded. Leaving blank will run for all Subsidiaries. | Company, Inc. |
| Location | Select the Location for whom reclass entries will be recorded. Leaving blank will run for all Locations. | Las Vegas |
| Lease Type | Select the Lease Type for whom reclass entries will be recorded. Leaving blank will run for all Lease Types. | Real Estate |
| Lease | Select a specific lease for whom reclass entries will be recorded. Leaving blank will run for all Leases. | LA0370 |
- Refresh the page until the Processing Status indicates Complete and the journal entries are listed in the batch summary
- You can select the Journal Entry link to review the first reclass journal entry. The short-term portion of the lease liability will be moved to the short-term account.
- You can access the associated reversal entry by clicking the hyperlink in the Reversal # field on the main journal entry. Both entries are automatically posted when the reclass journal entry is run.
- Note that both reclass journal entries are tied to the lease record and can be viewed by navigating back to the lease record and looking at the Other Related Transactions sublist within the Related Records subtab
- Reclass journals are also tagged to the NetLease Schedule Line period they apply to under the Reclass Information field group
Note: No entry will be generated if the balance for your current liability allocated to principal is negative for the specified period.
In Addition: See the following link provided on how Netgain Approaches Calculating Your Lease Liability.