NetLease - Lease residual guarantees
Overview
The Lease Residual Guarantees report is a saved search that summarizes residual value guarantees and residual value estimates across the lease portfolio. It shows the sum of the residual value guarantee and the sum of the residual value estimate for each lease classification and subsidiary, with a
link to drill down to the individual leases.
Unlike the purchase, renewal and expansion option reports, residual values are not contract provisions. They are entered on the lease record itself, on the Accounting subtab under the Disclosure Information section, in the Residual Value Estimate and Residual Value Guarantee fields. See NetLease - Accounting Subtab on Lease Record for details.
Report details
| Report type | Saved search (bundled with NetLease, not a scripted report) |
| Category | Disclosure reports |
| Data source | Residual Value Estimate and Residual Value Guarantee fields on the NetLease Lease record (Accounting subtab) |
| Standard | Supports the qualitative disclosure of residual value guarantees in ASC 842-20-50-3(a) |
When to use this report
- Quarter-end and year-end reporting - to draft the narrative footnote describing residual value guarantees provided by the lessee.
- Audit requests - when auditors ask for the population of leases with residual value guarantees, to test that amounts probable of being owed are included in lease payments.
- End-of-lease planning - to see the guaranteed and estimated residual values on leases ending in a given window, using the end date filter.
Prerequisites
- A role that can run NetLease disclosure reports and view NetLease Lease records.
- The Residual Value Estimate and/or Residual Value Guarantee fields are completed on each relevant lease. See NetLease - Accounting Subtab on Lease Record.
Running the report
- Navigate to NetLease > Reports > Disclosure Reports > Lease Residual Guarantees > Run.
- Set the filters (see below). The results update automatically as filter options are selected.
| Filter | Description |
|---|---|
| End Date | Limits results by lease end date. |
| Subsidiary | Limits results to leases for the selected subsidiary. |
| Lease Type | Limits results to leases of the selected lease type. |
| Status | Limits results to leases of the selected status. |
Set the filters to "All" to see a full list of leases with residual values.
Results
The report shows a sum of residual value guarantee and a sum of residual value estimate for each lease classification and subsidiary. Click a lease classification link to see all leases within that classification.
| Column | Description |
|---|---|
| Lease classification | Lease classification grouping. Click to drill down to the leases in the group. |
| Subsidiary | Subsidiary grouping. |
| Residual value guarantee (sum) | Total of the Residual Value Guarantee field for the leases in the group. |
| Residual value estimate (sum) | Total of the Residual Value Estimate field for the leases in the group. |
Audits, disclosures and footnotes
Under ASC 842-20-50-3(a), a lessee discloses qualitative information about the nature of its leases, including the existence and terms and conditions of residual value guarantees it provides. This report provides the population of leases with residual value guarantees, by classification and subsidiary, to support that narrative.
The Residual Value Guarantee and Residual Value Estimate fields are informational. They do not change the lease schedule. Any amount it is probable the lessee will owe under a residual value guarantee must be included in the lease payment schedule so it is reflected in the lease liability.
| Disclosure requirement | Where to find it |
|---|---|
| Residual value guarantees - existence and terms | This report |
| Options to extend (renewal options) | NetLease - Lease renewal option |
| Purchase options | NetLease - Lease purchase options |
| Expansion options | NetLease - Lease expansion option |
Tips for audit support
- Drill into each lease classification and export the lease-level results to give auditors the full population.
- For each lease with a guarantee, show where the probable shortfall is included in the final payment on the lease payment schedule.
- Keep the export with your quarter-end or year-end workpapers.
Frequently asked questions
Is this report a saved search? Can I edit its columns?
Yes. It is a saved search, so after running it the Edit this Search button is available. Before changing it, give the search a new title and click Save As to save a copy. Edits made directly to the bundled search can revert to the Netgain version on a future bundle update. See NetLease - Editing Reports in NetLease for the full steps, including creating a copy of the report that points to your new search.
Where are residual values entered? Do I need a contract provision?
No contract provision is needed. Enter the amounts in the Residual Value Estimate and Residual Value Guarantee fields in the Disclosure Information section of the lease's Accounting subtab.
What is the difference between the residual value estimate and the residual value guarantee?
The residual value estimate is the expected value of the leased asset at the end of the lease. The residual value guarantee is the value the lessee has guaranteed to the lessor. If the estimate is below the guarantee, the expected shortfall should be included in the final month of the lease payment schedule.
Does entering a residual value guarantee change the lease liability?
No. Both fields are informational. To reflect an amount probable of being owed in the lease liability, add it to the lease payment schedule.
Why do I see totals instead of individual leases?
The report summarizes by lease classification and subsidiary. Click a lease classification link to see the leases behind each total.
Troubleshooting
- No results - open a lease that should appear and check that the Residual Value Estimate or Residual Value Guarantee field on the Accounting subtab is completed. See NetLease - Accounting Subtab on Lease Record.
- A lease is missing - check that the End Date, Subsidiary and Lease Type filters do not exclude it.
- Columns differ from this article - the search may have been customized in your account. Compare it to the bundled version or a saved copy.
