Real Property / Leases / Lease Portfolio / Extension for Lease Accounting

To Record an Option for Tenant Improvement Costs

When calculating the value of the ROU Asset and lease liability, the Wizard subtracts tenant improvement costs and other incentives from the ROU Asset and lease liability in the period in which the incentive is received (not at the commencement of the lease).

Procedure

Enter the lease using the Portfolio Edit Wizard or the Lease Portfolio Console. Both are available on the Navigator at Real Property / Leases / Lease Portfolio.

  1. Add an option of type IMPROVEMENTS. Enter the Estimated Cost and the Date Exercising Available, which will be used to determine the period that the incentive is received.

    • 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.

    • Since this is a one-time cost, you can record the cost in the Options table. See Concept: Lease Costs and Option Costs.
    • If you are the lessee, enter the Estimated Cost as negative, as the Estimated Cost decreases your lease payments.
  1. Alternately, you can enter the costs into the Costs table using the LEASEHOLD IMPROVEMENT Cost Category. Use this method if you wish to:
    • enter multiple improvement costs that occur at different times and that can be applied to different fiscal periods.
    • record improvement costs using the multi-currency features of Archibus (Archibus Enhanced Global Feature Set) if you have leases in different currencies.
  2. Load the Real Property / Leases / Lease Portfolio / Lease Classification Wizard and work through the questions, changing the options from Pending and moving through the various tabs. The program saves the lease classification data and regenerates a new amortization schedule that includes the improvements.

Outcome