NetLease - Components of lease costs & impairments report
Overview
The Components of Lease Costs & Impairments report summarizes lease cost recognized during a period, grouped by cost component. It produces the figures for the "Components of lease cost" table in the lease footnote under ASC 842-20-50-4. Each component can be drilled down by lease and then to the individual subledger (schedule line) amounts behind it, so every figure in the footnote can be traced to source.
The report presents the following components:
| Component | What it includes |
|---|---|
| Operating lease cost | Straight-line lease expense on leases classified as Operating |
| Financing lease cost - Amortization of ROU assets | ROU asset amortization on leases classified as Financing |
| Financing lease cost - Interest on lease liabilities | Interest expense on leases classified as Financing |
| Short term lease costs | Lease expense on leases classified as Short Term / Low Value |
| Less sublease income | Income on sublease (operating) leases, shown as a reduction to cost |
| Impairments on ROU assets | ROU asset impairment modifications on Operating and Financing leases |
Report details
| Report type | Scripted report (runs in the NetLease report engine, not a saved search) |
| Category | Disclosure reports |
| Data source | NetLease subledger (lease schedule lines) |
| Standard | ASC 842-20-50-4 (a), (b), (c), (e) and ROU impairment |
| Can be scheduled | Yes - see NetLease - Scheduled Scripted Reports |
When to use this report
- Quarter-end and year-end reporting - to populate the components of lease cost table in the financial statement footnotes.
- Audit requests - when auditors ask for a breakdown of total lease cost by type, with lease-level support.
- Month-end review - to check expense by component before closing, for example confirming impairments or new short-term leases hit the right line.
- Budget vs actual and flux analysis - to explain movements in lease cost between periods.
Prerequisites
- A role with access to NetLease reports (the NetLease Report record).
- Leases are classified (Operating, Financing, Short Term / Low Value, Sublease) and their schedules are generated for the reporting period.
Running the report
- Navigate to NetLease > Reports > Disclosure Reports > Components of Lease Costs & Impairments Report > Run.
- Set the filters (see below). Set the accounting period to the period being reported.
- Click Preview to view the results, or Export to download them to Excel.
| Filter | Description |
|---|---|
| Subsidiary | Limits results to leases for the selected subsidiary. |
| Consolidation Subsidiary | Subsidiary to consolidate the results as. This drives FX conversion to that subsidiary's base currency. Multi-currency accounts only. |
| Currency | Currency to display the report in. |
| Consolidated Exchange Rate | Rate type used to translate results: Average, Current, Historical, Custom or None. Accounts that are not OneWorld see Current (To Date), Historical (From Date), Custom or None. |
| Consolidation Date | Date to pull the exchange rate from when Custom is selected. |
| Export Level | Level of detail in the export: Level 1 (Disclosure summary), Level 2 (Lease), Level 3 (Subledger detail), or Full Hierarchy (all levels). |
| Export Format | Specifies what format the report should be exported in (Excel or CSV). |
| Department / Class / Location | Limits results to leases with the selected segment values. Multi-select. |
| Lease | Limits results to a single lease. |
| Accounting Period | Period to report on. Quarter and year periods total the activity across the whole period. |
| From Date / To Date | Alternative to the accounting period, for a custom date range. |
| Accounting Book | Multi-book accounts only. Reports the selected book, using each lease's secondary classification when the secondary book is selected. |
| Show Non-Book Specific Transactions | Multi-book accounts only. Available once an accounting book is selected. |
| Hide Currency Symbol | Removes currency symbols from the output. |
| Show FX Calculations | Shows amounts in lease, subsidiary and consolidated currency, with the exchange rates used. |
Filter the accounting period to reflect the current reporting period.
Show FX Calculations Filter
This checkbox enables users to view lease balances in the lease currency, subsidiary currency, and consolidated currency. It also displays the exchange rates used to calculate these balances.
This option is useful for viewing and reconciling balances for leases that have undergone remeasurement or have been consolidated into a different subsidiary currency.
Results
The report shows each cost component with its total. Expand a component to see the amount by lease, then expand a lease to see the subledger lines behind it. Click Export to save the report as an Excel file.
Audits, disclosures and footnotes
The report is designed to produce the components of lease cost table required by ASC 842-20-50-4.
ASC 842-20-50-4 For each period presented in the financial statements, a lessee shall disclose the following amounts relating to a lessee’s total lease cost, which includes both amounts recognized in profit or loss during the period and any amounts capitalized as part of the cost of another asset in accordance with other Topics, and the cash flows arising from lease transactions:
a. Finance lease cost, segregated between the amortization of the right-of-use assets and interest on the lease liabilities.
b. Operating lease cost determined in accordance with paragraphs 842-20-25-6(a) and 842-20-25-7.
c. Short-term lease cost, excluding expenses relating to leases with a lease term of one month or less, determined in accordance with paragraph 842-20-25-2.
d. Variable lease cost determined in accordance with paragraphs 842-20-25-5(b) and 842-20-25-6(b).
e. Sublease income, disclosed on a gross basis, separate from the finance or operating lease expense.
f. Net gain or loss recognized from sale and leaseback transactions in accordance with paragraph 842-40-25-4.
g. Amounts segregated between those for finance and operating leases for the following items:
- Cash paid for amounts included in the measurement of lease liabilities, segregated between operating and financing cash flows
- Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
- Weighted-average remaining lease term
- Weighted-average discount rate.
Below is an example of the "Summary of Components of Net Lease Cost" disclosure for Financial Statements. The report within NetLease is designed to fulfill this disclosure requirement.
| Disclosure requirement | Where to find it |
|---|---|
| (a) Finance lease cost - amortization and interest | This report |
| (b) Operating lease cost | This report |
| (c) Short-term lease cost | This report (leases classified Short Term / Low Value in NetLease) |
| (d) Variable lease cost | Not calculated by this report - source separately |
| (e) Sublease income | This report |
| (f) Sale and leaseback gain/loss | Not covered by NetLease reports |
| (g)(1)-(2) Cash paid and noncash ROU additions | NetLease - Supplemental Cash Flow Information |
| (g)(3) Weighted-average remaining term | NetLease - Weighted Average Term Report |
| (g)(4) Weighted-average discount rate | NetLease - Weighted Average Rate Report |
Tips for audit support
- Export at Full Hierarchy to give auditors the summary, lease-level and subledger-line detail in one file.
- Run the report for each period presented (for example current year and prior year) with the same filters, so the footnote columns are consistent.
- Keep the export with your close workpapers. Scheduled reports can save it automatically each period.
Frequently asked questions
Is this report a saved search? Can I edit its columns?
No. It is a scripted report, so its rows and columns are fixed by NetLease. You can narrow results with the filters, or add custom filters. To build a different layout, see NetLease - Custom Scripted Report.
Why don't my short-term lease costs match what we paid on short-term leases?
The Short term lease costs line only includes leases entered in NetLease with the Short Term / Low Value classification. Short-term rentals that are expensed directly in NetSuite and never set up as leases will not appear.
Why is there no variable lease cost line?
The report does not calculate variable lease cost. Source that disclosure line separately.
Why is sublease income negative?
Sublease income is presented as a reduction of total lease cost ("Less sublease income"), so it shows as a negative amount.
Where do impairments come from?
The Impairments on ROU assets line includes lease modifications recorded with the ROU impairment modification type, for both Operating and Financing leases.
Which exchange rate is used for foreign-currency leases?
ROU amortization and impairments use the lease's historical rate. Operating cost, interest, short-term cost and sublease income use the rate for the period of each schedule line. The Consolidated Exchange Rate filter then controls translation to the reporting currency. Check Show FX Calculations to see every rate used.
Can I run it for a quarter or a full year?
Yes. Select a quarter or year accounting period, or enter a From Date and To Date. The report totals the activity across the whole range.
How does it work with multi-book accounting?
When an accounting book is selected, the report uses each lease's classification for that book. For example, a lease that is Operating in the primary book and Financing in a secondary book is reported under the classification for the selected book.
Troubleshooting
- A lease is missing - confirm the lease is classified and its schedule covers the selected period, and check that no subsidiary, segment or lease filter excludes it.
- Totals differ from the general ledger - the report reads from the NetLease subledger, not from posted journals. Use NetLease - Reconciling the Subledger to the General Ledger to tie out.
- FX amounts look wrong - rerun with Show FX Calculations checked and review the rates applied to each line.
