Real Property / Leases / Lease Portfolio / Extension for Lease Accounting
To Record a Lease Buy-out Option that is Reasonably Certain to be Exercised
Create an option record representing the contractual right to buy.
Procedure
- Invoke the Portfolio Edit Wizard or the Lease Portfolio Console. Both are available on the Navigator at Real Property / Leases / Lease Portfolio.
- Create an option record representing the contractual right to purchase.
| Field | Value |
|---|---|
| Option Type | OPTION TO BUY |
| Date Exercising Applicable | Enter the date the buy-out option will be executed and the cost of the option will be paid. |
| Is reasonably certain? |
Yes If an option "is reasonably certain" to be exercised, mark it as such. If you change an option, and the lease is already has a workflow status of "Submitted for Approval" or "Approved", then the Lease Classification Wizard will capture your comments on the change for the audit log, log the change, and flag the lease for Re-evaluation. |
| Cost - Estimated | Enter the estimated cost of the option. Since this is a one-time cost, you can record it in the Options record. See Concept: Lease Costs and Option Costs. |
- Load the Real Property / Leases / Lease Portfolio / Lease Classification Wizard, and work through its options, changing the Pending statuses and updating any other information.
- The Wizard examines the Costs and Option Costs and generates the amortization schedule.
- You can review the option on the Step 3 tab.
Outcome
- Lease record representing the full term of the lease and the options.
- Option record describing the buy-out option and its cost.
- Lease Amortization Schedule holds schedule of amortized costs over life of lease.