Lease Terminations

Overview

Circumstances may require an early termination to the lease. In these instances, a termination is required to remove the accumulated amortization.

Process Steps

Step 1:

  • Navigate to the lease record to be terminated. An example lease record to be terminated is shown here.

                 


Step 2:

  • Select Terminate and you'll be navigated to the lease termination page.

Step 3:

  • Update the fields as necessary for the Lease Termination.

Field

Description

Example

Effective Termination Date

Defaults to the first period without amortization recorded. To update to a later period, monthly journals will have to be run up to that point – please consider carefully before skipping ahead. If the default termination date on the screen is later than the desired termination date, deleting amortization entries for month of termination will be necessary. 

07/01/2023

Cash Paid to Terminate Lease

Input the amount to be paid in the lease termination month. Note that this amount should include both (1) standard lease payments, as well as (2) termination penalties or other consideration to be paid upon termination
Note: This amount will be recorded to the Lease Liability Payable Clearing Account

3,500

Cash Received to Terminate Lease

 

Input the amount to be received from the termination.
Note: This amount will be recorded to the ROU Clearing Account

0

Termination Reason

Provide a brief description of the reason for the termination. 

Early termination

Termination Note

Provide any additional description or details for the termination

Excess supply and under-utilized; to return to lessor

 

Step 4:

  • After double-checking updates and inputs for the Lease Termination, click Terminate.
  • You will be redirected back to the lease record. Refresh the page periodically until the Processing Status is blank and the Status is Terminated.
  • Once the termination is complete, you will see the termination under the Termination tab on the lease record. 


  • You will also see that the subsequent lines on the Amortization Schedule have been removed.


Step 5:

  • To view the impact that the lease termination will have on your journal entry, navigate to the Journal Entry Report: Lease Activity. 


Was this article helpful?