NetLease - True Up Modification

Use Case: In the middle of a lease's life, a user may determine that a lease was commenced with the wrong information or has been incorrectly accounted for in subsequent periods since commencement, resulting in incorrect balance sheet and income statement impact to date. If a NetLease user elects not to reverse activity back to the original commencement date or the applicable period since commencement through the Time Machine, a true-up modification entry can instead be made to correct the life-to-date G/L impact based on point-in-time lease information. A modification journal in the current period "trues up" the accounting impacts to what the current period beginning balances should have been had the different information been input for the lease. All historical information is retained with historical schedule lines, and a true-up line is created with a link to the true-up entry. Any differences are recorded against the appropriate accounts. 

Prerequisites: Lease modifications will be effective in the month after which amortization has been run. Prior to entering the modification, confirm that your lease has not had amortization ran in the period you want the true up to be effective for. 

STEP BY STEP PROCESS

• Navigate to the NetLease record where the modification is to be recorded and click the Modify button.
• On the Lease Modification page click the down arrow on the Modification Type field and select True Up. View full size
• The Lease Version field will show the commencement period of the lease.
  • If the true up is needed from the commencement date, update the applicable fields (for field descriptions see the table below).
  • If the true up applies to a period after commencement, select the Add Version button. View full size
    • You will be directed to select an effective date for the new lease version. All periods from commencement to the current period will be available. Select the appropriate date and click Add Version.  View full size
    • Next, update the fields as necessary for this lease version.
  • If additional versions are necessary, repeat the steps above.
• After double-checking inputs for the modification, click Modify Lease. You will be navigated back to the lease record where you can refresh until the Processing Status no longer reads Processing Revaluation...
• The Effective Modification Date Period will be split into two lines - one to record the GL Impact of the Modification and one to record the normally scheduled amortization.

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• Click on hyperlink to the NetLease Modification Entry to see the old asset G/L impacts reversed out and new G/L impacts re-established.

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• A NetLease Modification record will be saved on the Modification subtab of the asset to store historical data before and after the modification.
  • Clicking the ID link will reveal the lease information both before and after the revaluation.

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• If necessary to reverse the modification, you can select the Reverse Modification button to revert back to the schedule prior to the true up modification.

True Up Field Descriptions