General Ledger Accounting

Contents

• Introduction
  

• Chart of Accounts

• Assets
• Liabilities
• Income
• Expenses
  
  

• Transaction Processing

  • New Lease Accounting
    • Add Asset
    • Book Lease
    • Change Asset
    • Delete Asset
    • Disburse Check
      
      
• Rebook Accounting
  
  
• Assessment Accounting
  
  
• Payment Accounting
  
  
• Payoff Accounting
  • Payoff
  • Termination
  • Sale of Asset in Inventory
    
    
• Accrual Accounting
  
  
• Suspended Earnings Accounting
  
  
• Change Key Accounting
  
  

• Reconciliation Procedures

Introduction

LeasePak provides full General Ledger accounting for the lease portfolio from lease commencement through lease maturity and/or the disposition of the asset. All changes to the General Ledger are recorded in the Transaction (RTX) file and are reported on several Audit Control [R04] reports.

LeasePak employs the double-entry method of accounting. Every transaction affects two or a multiple of two accounts by the same debit and credit amounts. This insures that debits to the ledger always equal credits.

Accounts are categorized as either a debit balance or a credit balance account. An account is a debit balance account if the sum of the debits normally exceeds the sum of the credits. Examples of debit balance accounts are cash, receivable, and residual. An account is a credit balance account if the sum of the credits normally exceeds the sum of the debits. Examples of credit balance accounts are unearned income, earned income, and payables.

A debit to a debit balance account increases the account's balance. A credit to the account decreases its balance. Conversely, a credit to a credit balance account increases the account's balance and a debit to the account decreases its balance.

Topics which are included in this document are:

• LeasePak Chart of Accounts
• Transaction Processing
• Reconciliation Procedures

Chart of Accounts

The following is a general description of each LeasePak General Ledger account. The accounts are segregated by type (i.e., Assets, Liabilities, Income, and Expenses).

Assets

Clearing (debit balance)
This account is used in conjunction with the cash account to record transactions which do not directly affect cash (e.g., Change Lease Key, Payoff, Termination, etc.).

Cash (debit balance)
This account holds all cash amounts received or disbursed.

Contract Receivable (debit balance)
This account holds the total of all remaining lease payments to be accrued plus the guaranteed residual value for all precomputed interest type leases in the portfolio.

Lease Payments Receivable (debit balance)
This account holds the total of outstanding lease payments (accrued and billed) and use tax receivable.

Unguaranteed Residual - Precomputed (debit balance)
This account holds the unguaranteed portion of the residual value of all precomputed interest type leases in the portfolio.

Lease Income Receivable (debit balance)
This account holds the rental income accrued (but not due). A balance is present in this account only for leases with other than monthly payment schedules. If there are no non-monthly leases in the portfolio, the balance of this account is always zero (however, there may be offsetting debit and credit activity).

Unearned Residual Income (credit balance)
This account holds the total unrecognized residual income for the precomputed interest type leases in the portfolio. It is only used if residual income is accreted.

Unearned Income (credit balance)
This account holds the total unrecognized rental income (income remaining to be accrued) for the precomputed interest type leases in the portfolio.

Unearned ITC (credit balance)
This account holds the total unearned book Investment Tax Credit for the precomputed interest type leases in the portfolio. This account is used only if ITC income is accrued for book purposes.

Vendor Participation Unearned (credit balance)
This account holds the total remaining vendor portion of the rental income to be accrued for the precomputed interest type leases in the portfolio. This account is used only if vendors are participating in the income earnings or a percentage of the payment of leases.

Investor Participation Unearned (credit balance)
This account holds the total remaining investor portion of the rental income to be accrued for the precomputed interest type leases in the portfolio. This account is used only if investors are participating in the income earnings of leases.

Assessed Fees (credit balance)
This account holds the aggregate total of fees assessed and unpaid to the leases in the portfolio. Only those fees which are accounted for on a cash basis are totaled in this account. It is cleared when the fee is paid by the lessee.

Assessments Receivable - Late Charge (debit balance)
This account holds the total of all late charges assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Collection Fee (debit balance)
This account holds the total of all collection charges assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Assumption Fee (debit balance)
This account holds the total of all lease assumption fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Property Tax (debit balance)
This account holds the total of all property tax assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Legal Fee (debit balance)
This account holds the total of all legal fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Payment Extension (debit balance)
This account holds the total of all payment extension fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - ITC Fee (debit balance)
This account holds the total of all ITC pass through fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - FHUT (debit balance)
This account holds the total of all federal highway use taxes assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Lease Rewrite Fee (debit balance)
This account holds the total of all lease renegotiation fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Lease Extension (debit balance)
This account holds the total of all lease extension fees assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Other Fees (debit balance)
This account holds the total of all miscellaneous fees assessed and unpaid by the lessee for all applicable leases in the portfolio.

Assessments Receivable - Registration Fees (debit balance)
This account holds the total of all registration fees assessed and unpaid by the lessee for all applicable leases in the portfolio.

Unamortized Registration Fees (credit balance)
Registration fees are billed and due at commencement, then the income is amortized over the term of the lease. This account holds the unamortized portions of the fees.

Assessments Receivable - Opening Commission (debit balance)
This account holds the total of all opening commission assessed and unpaid by the lessee for all applicable leases in the portfolio.

Unamortized Opening Commission (credit balance)
Opening commissions are billed and due at commencement, then the income is amortized over the term of the lease. This account holds the unamortized portions of the opening commissions.

Insurance Fee Receivable (credit balance)
This account holds the total of all insurance fee receivables established on new leases and unpaid.

Insurance Fee Offset (debit balance)
This is a memo account. LeasePak does not bill for insurance fee. When the fee is paid, a manual G/L Adjustment [U0121] is performed.

Vendor Subsidy Receivable (credit balance)
This account holds the total of all vendor subsidy receivables established on new leases and unpaid.

Vendor Subsidy Offset (debit balance)
This is a memo account. LeasePak does not bill for vendor subsidy. When the payment is received, a manual G/L Adjustment [U0121] is performed.

Principal Outstanding (debit balance)
This account holds the principal balance outstanding for all simple interest type leases in the portfolio.

Residual - Simple (debit balance)
This account holds the estimated market value of all simple interest type leases in the portfolio. The sum of residual (simple) and principal outstanding is the net investment in the lease.

Leased Equipment (debit balance)
This account holds the total book value at lease inception of all equipment on lease for operating type leases.

Unbilled Operating Lease Receivable (debit balance)
This account holds the operating rental income accrued (but not due) for operating leases with other than monthly payment schedules.

Unbilled Operating Lease Income (debit balance)
This account holds the total current unbilled income for all straight-line operating leases (AOSL, ROSL). Unbilled income results from the straight-line recognition of income for leases with uneven payments. Therefore, if there are no straight-line operating leases with uneven payment schedules, the balance in this account is always zero. This account may hold a negative balance if the straight-line recognition of income accelerates the actual income earned, for example, in the case of a step up payment schedule.

Inventory (debit balance)
This account holds the lower of the fair market value or the net book value at lease termination of all equipment in inventory (not on-lease). The acquisition cost of new equipment added onto the system but not yet booked as a lease is also included in this account.

Deferred Charge (debit balance)
This account holds the portion of initial direct costs not yet accrued for all operating type leases.

Deferred ITC (credit balance)
This account holds the portion of Investment Tax Credit not yet accrued for all operating type leases.

Unamortized IDC Cost (debit balance)
This account holds the portion of initial direct costs which has not yet been amortized (under Statement 91 of the Financial Accounting Standards Board).

Unamortized Insurance Premium (IDC1) (debit balance)
This account holds the portion of insurance fees which has not yet been amortized (under Statement 91 of the Financial Accounting Standards Board).

Unamortized Notary Fee (IDC2) (debit balance)
This account holds the portion of notary fees which has not yet been amortized (under Statement 91 of the Financial Accounting Standards Board).

Vendor Receivable (debit balance)
This account is only used if there is vendor participation in the lease and the vendor is participating in a percentage of the payments (not income). This account holds the total of all remaining vendor portions of the lease payments to be accrued and billed.

Principal Receivable (debit balance)
This account holds the total principal unpaid for floating rate leases with level payments. This account may have a positive or a negative balance. A positive balance indicates a receivable to the lessor (resulting from a net increase in the interest rates for floating rate leases); a negative balance indicates a payable (resulting from a net decrease in the interest rates for floating rate leases).

Assessments Receivable - Recurring Charge 1 (debit balance)
This account holds the total of all recurring charges (type 1) assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Recurring Charge 2 (debit balance)
This account holds the total of all recurring charges (type 2) assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Recurring Charge 3 (debit balance)
This account holds the total of all recurring charges (type 3) assessed and unpaid by the lessee for all leases in the portfolio.

Assessments Receivable - Recurring Charge 4 (debit balance)
This account holds the total of all recurring charges (type 4) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 5 (debit balance)
This account holds the total of all recurring charges (type 5) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 6 (debit balance)
This account holds the total of all recurring charges (type 6) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 7 (debit balance)
This account holds the total of all recurring charges (type 7) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 8 (debit balance)
This account holds the total of all recurring charges (type 8) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 9 (debit balance)
This account holds the total of all recurring charges (type 9) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 10 (debit balance)
This account holds the total of all recurring charges (type 10) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 11 (debit balance)
This account holds the total of all recurring charges (type 11) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 12 (debit balance)
This account holds the total of all recurring charges (type 12) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 13 (debit balance)
This account holds the total of all recurring charges (type 13) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 14 (debit balance)
This account holds the total of all recurring charges (type 14) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Recurring Charge 15 (debit balance)
This account holds the total of all recurring charges (type 15) assessed and unpaid by the lessee for all leases in the portfolio. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Receivable - Escrow Recurring Charge
This account holds the total of all escrow receivable recurring type charges assessed with each lease.

Assessments Payable - Escrow Recurring Charge
This account holds the total of all escrow payable recurring type charges assessed with each lease.

Suspended Receivable (income) (debit balance)
This account holds the unpaid income portion of payments accrued while a lease is in a suspended earnings status. This account, in conjunction with Suspended Receivable (principal), is used in place of Lease Payments Receivable for suspended leases.

Suspended Receivable (principal) (debit balance)
This account holds the unpaid principal portion of payments accrued while a lease is in a suspended earnings status. This account, in conjunction with Suspended Receivable (income), is used in place of Lease Payments Receivable for suspended leases.

Suspended Income Receivable (unbilled) (debit balance)
This account holds the suspended income accrued (but not due). A balance is present in this account only for suspended leases with other than monthly payment schedules. If there are no non-monthly suspended leases in the portfolio, the balance of this account is always zero (however, there may be offsetting debit and credit activity). This account exactly parallels the function of the Lease Income Receivable G/L account.

Loan Principal Receivable (debit balance)
This account holds the unpaid principal portion of payments accrued for an interest bearing loan. This account, in conjunction with Loan Interest Receivable, is used in place of Lease Payments Receivable for interest bearing loans.

Loan Interest Receivable (debit balance)
This account holds the unpaid income portion of payments accrued for an interest bearing loan. This account, in conjunction with Loan Principal Receivable, is used in place of Lease Payments Receivable for interest bearing loans.

LD Receivable (debit balance)
This account holds the total balance of outstanding payments to collect on discounted leases. Only payments due on or after the discounting effective date, and due on or after the group effective date are included into this balance. This account is used only if the Lease Discounting module is purchased and the investor required switch in the Module Customizations option of the Portfolio update [U0212] is set to Y.

Suspended IDC Accrued (debit balance)
This account holds the amount of IDC accrued while the lease is in a suspended earning status. The IDC accrued is transferred out of this account into the IDC Amortization GL when/if the earnings are reinstated for the lease.

Suspended Insurance Premium (IDC1) Accrued (debit balance)
This account holds the amount of insurance premium accrued while the lease is in a suspended earning status. The premium accrued is transferred out of this account into the insurance premium amortization GL when/if the earnings are reinstated for the lease.

Suspended Notary Fee (IDC2) Accrued (debit balance)
This account holds the amount of notary fee accrued while the lease is in a suspended earning status. The fee accrued is transferred out of this account into the notary fee amortization GL when/if the earnings are reinstated for the lease.

Security Deposit on Notes Payable (debit balance)
This account holds the amount of security deposits held by the lender on notes payable. It is the same G/ L account as that used to record credits for security deposits for leases held by the lessor.

Liabilities

Accounts Payable (credit balance)
This account holds the total acquisition cost of all leased equipment which has not yet been paid by the lessor. Payment occurs when a disbursement is made through LeasePak for the asset.

Vendor Participation Payable (credit balance)
This account holds the total vendor portion of the rental income earned and payable from all leases in the portfolio.

Investor Participation Payable (credit balance)
This account holds the total investor portion of the rental income earned and payable from all leases in the portfolio.

Use Tax Payable (credit balance)
This account holds the total dollar amount of use tax accrued and/or payable from all leases in the portfolio.

Security Deposit Payable (credit balance)
This account holds the total dollar amount of refundable security deposits held for all leases in the portfolio.

Taxes Payable (credit balance)
This account holds the total amount of Investment Tax Credits accumulated for leases in the portfolio. It typically has a negative balance because only tax credits are tracked in the account.

Assessments Payable - Property Tax (credit balance)
This account holds the total of all property taxes to be paid to the taxing authorities for all leases in the portfolio.

Assessments Payable - FHUT (credit balance)
This account holds the total of all federal highway use taxes to be paid to the taxing authorities for all leases in the portfolio.

Suspense (credit balance)
This account holds the total dollars held to be researched and/or processed on a future date.

Deferred Operating Lease Revenue (credit balance)
This account holds the total amount of operating lease income collected and/or receivable but not yet recognized as income.

Notes Principal Outstanding Payable (credit balance)
This account holds the total amount of notes payable principal payable not yet accrued.

Notes Principal Payable (credit balance)
This account holds the total amount of notes payable principal payable accrued and unpaid.

Notes Interest Payable (credit balance)
This account holds the total amount of notes payable interest payable accrued and unpaid.

Unearned Premium Service Fee (debit balance)
This account holds any GAP fee, service fee and lease fee to be paid to the lender for notes payable.

Reserve for Charge Back (credit balance)
This account holds amounts in reserve for notes payable.

Deferred Settlement (credit balance)
This account holds the total balance of the outstanding expected settlement payments. This account is used only if the Lease Discounting module is purchased and the investor required switch in the Module Customizations option of the Portfolio update [U0212] is set to Y.

Settlement Payable (credit balance)
This account holds the total balance of due settlement payments. This account is used only if the Lease Discounting module is purchased and the investor required switch in the Module Customizations option of the Portfolio update [U0212] is set to Y.

Commission Fees Payable (credit balance)
This account holds the total amount of commission (broker) fees payable. This amount is part of initial direct costs.

Insurance Premium Payable (debit balance)
This account holds the total amount of insurance premium (IDC1) payable to brokers.

Notary Fee Payable (debit balance)
This account holds the total amount of notary fees (IDC2) payable to brokers.

Assessments Income/Payable - Recurring Charge 1 (credit balance)
This account holds the total of all paid recurring charges (type 1) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end.

Assessments Income/Payable - Recurring Charge 2 (credit balance)

This account holds the total of all paid recurring charges (type 2) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end.

Assessments Income/Payable - Recurring Charge 3 (credit balance)
This account holds the total of all paid recurring charges (type 3) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end.

Assessments Income/Payable - Recurring Charge 4 (credit balance)
This account holds the total of all paid recurring charges (type 4) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 5 (credit balance)
This account holds the total of all paid recurring charges (type 5) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 6 (credit balance)
This account holds the total of all paid recurring charges (type 6) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 7 (credit balance)
This account holds the total of all paid recurring charges (type 7) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 8 (credit balance)
This account holds the total of all paid recurring charges (type 8) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 9 (credit balance)
This account holds the total of all paid recurring charges (type 9) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 10 (credit balance)
This account holds the total of all paid recurring charges (type 10) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 11 (credit balance)
This account holds the total of all paid recurring charges (type 11) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 12 (credit balance)
This account holds the total of all paid recurring charges (type 12) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 13 (credit balance)
This account holds the total of all paid recurring charges (type 13) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 14 (credit balance)
This account holds the total of all paid recurring charges (type 14) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Assessments Income/Payable - Recurring Charge 15 (credit balance)
This account holds the total of all paid recurring charges (type 15) for all leases in the portfolio. For income assessments, the account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, income assessments are cleared at the fiscal year-end. This account is used only if the Extended Recurring Charge module is purchased.

Income

Revenue (credit balance)
This account includes initial direct costs from all direct finance leases unless IDC is amortized (under FASB Statement No. 91). This account also holds ITC accrued for all operating leases.

Lessor Income - Precomputed (credit balance)
This account holds the total lease rental income earned from precomputed interest type leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year- end.

Lessor Income - Simple (credit balance)
This account holds the total rental income earned from the simple interest type leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Operating Lease Income (credit balance)
This account holds the total rental income accrued for all operating type leases. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Residual Income (credit balance)
This account holds the total residual income earned from precomputed interest type leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year- end.

Other Charges (credit balance)
This account holds the total dollar amount of additional charges to leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

In-house Fees (credit balance)
This account holds the total dollar amount of in-house fees collected from leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Documentation Fees (credit balance)
This account holds the total dollar amount of documentation fees collected from leases in the portfolio. This amount is part of initial direct costs. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end. This account is not used if IDC is amortized (under FASB Statement No. 91).

Termination Fees (credit balance)
This account holds the total dollar amount of termination fees charged to terminating leases. Included in this account are termination fees, prepayment penalties, excess mileage, and excess wear and tear deductible charges. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Insurance Fees (credit balance)
This account holds the total dollar amount of amortized insurance fees.

Registration Fees (credit balance)
This account holds the total dollar amount of amortized registration fees.

Vendor Subsidy Income (credit balance)
This account holds the total dollar amount of amortized vendor subsidy receivables.

Opening Commission Income (credit balance)
This account holds the total dollar amount of amortized opening commission receivable.

Service Fee Income (credit balance)
This account holds any GAP fee, service fee or lease fee collected on a notes payable.

Assessments Income - Late Charge (credit balance)
This account holds the total of all late charges paid for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Collection Fee (credit balance)
This account holds the total of all collection charges paid for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Assumption Fee (credit balance)
This account holds the total of all lease assumption fees paid for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Legal Fee (credit balance)
This account holds the total of all legal fees paid by the lessee for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Payment Extension (credit balance)
This account holds the total of all payment extension fees paid by the lessee for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - ITC Fee (credit balance)
This account holds the total of all ITC pass through fees paid by the lessee for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Lease Rewrite Fee (credit balance)
This account holds the total of all lease renegotiation fees paid by the lessee for all leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Lease Extension (credit balance)
This account holds the total of all lease extension fees paid by the lessee for all applicable leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Assessments Income - Other Fees (credit balance)
This account holds the total of all miscellaneous fees paid by the lessee for all applicable leases in the portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Gain On Sale (credit balance)
This account holds the total dollar gain on the sale of equipment. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Bad Debt Income (credit balance)
This account holds the offset to unearned income for the bad debt expense. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end. This account is not used if IDC is amortized (under FASB Statement No. 91).

ITC Income (credit balance)
This account holds the book Investment Tax Credit income earned if it is calculated by the system. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

IDC Offset (credit balance)
This account is used to hold initial direct costs (excluding broker or commission fees) if IDC is amortized (under FASB Statement No. 91). This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Suspended Income Accrued (credit balance)
This account holds the amount of income accrued while the lease is in a suspended earnings status. The income accrued is transferred out of this account into the appropriate income account when/if the earnings are reinstated for the lease.

Suspended Insurance Fee Income (credit balance)
This account holds the amount of insurance fee accrued while the lease is in a suspended earnings status. The income accrued is transferred out of this account into the appropriate income account when/if the earnings are reinstated for the lease.

Suspended Registration Fee Income (credit balance)
This account holds the amount of registration fee income accrued while the lease is in a suspended earnings status. The income accrued is transferred out of this account into the appropriate income account when/if the earnings are reinstated for the lease.

Suspended Vendor Subsidy Income (credit balance)
This account holds the amount of vendor subsidy income accrued while the lease is in a suspended earnings status. The income accrued is transferred out of this account into the appropriate income account when/if the earnings are reinstated for the lease.

Suspended Opening Commission Income (credit balance)
This account holds the amount of opening commission income accrued while the lease is in a suspended earnings status. The income accrued is transferred out of this account into the appropriate income account when/if the earnings are reinstated for the lease.

Expenses

Loss On Sale Or Termination (debit balance)
This account holds the total dollar loss on the sale of equipment or the termination of a lease. A loss can be recorded at the termination of a lease if the fair market value of the equipment is less than the net book value. In this case, the difference is charged as a loss and the asset is placed into inventory at its fair market value.

Initial Direct Cost Expense (debit balance)
This account holds the total amount of initial direct costs incurred for all leases in the portfolio. This account is not used if IDC is amortized (under FASB Statement No. 91).

Depreciation Expense (debit balance)
This account holds the monthly amount of depreciation accrued for operating type leases. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Reserve for Recapture Expense (credit balance)
This account is used for adjustments to book Investment Tax Credit income recognized when assets are disposed of early.

Allowance For Bad Debt (credit balance)
This account holds the total dollar amount of doubtful account allowances for leases in the portfolio. This amount is part of initial direct costs.

Accumulated Depreciation (credit balance)
This account holds the total amount of depreciation accrued (life-to-date) for operating type leases.

Bad Debt Expense (debit balance)
This account holds the bad debt expense accumulated for the lease portfolio. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

IDC Amortization (debit balance)
This account holds the amortized portion of initial direct cost if IDC is amortized (under FASB Statement No. 91). This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, it is cleared at the fiscal year-end.

Insurance Premium (IDC1) Amortization (debit balance)
This account holds the amortized portion of insurance premium if IDC is amortized (under FASB Statement No. 91).

Notary Fee (IDC2) Amortization (debit balance)
This account holds the amortized portion of notary fees if IDC is amortized (under FASB Statement No. 91).

Property Tax Expense (debit balance)
This account holds the total of all property tax assessed. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, is cleared at fiscal year-end.

Federal Highway Use Tax Expense (debit balance)
This account holds the total of all federal highway use tax assessed. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, is cleared at fiscal year-end.

Note Interest Expense (debit balance)
This account holds the total of all interest accrued for notes payable. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, is cleared at fiscal year-end.

Notes Payable Interest Income/Expense (debit balance)
This account holds per diem interest on notes payable.

Provision for Rebate (debit balance)
This account holds reserve for charge back on notes payable.

Settlement Expense (debit balance)
This account holds the total of all settlement payments paid. This account may be cleared (zeroed) during the End of Month process. If it is not cleared monthly, is cleared at fiscal year-end. This account is used only if the Lease Discounting module is purchased and the investor required switch in the Module Customizations option of the Portfolio update [U0212] is set to Y.

Transaction Processing

The General Ledger debit and credit transactions that are automatically performed for the main updates are explained in this section. LeasePak employs the double-entry method of accounting. That is, every transaction affects two or a multiple of two accounts by the same debit and credit amounts. This insures that the debits to the ledger always equal the credits.

Each section details the debit and credit account pair(s) and the amount by which each is changed in the following manner:

Description of the transaction

General Ledger accounting for the following functions are detailed:

• New Lease
• Rebook
• Assessment
• Payment
• Payoff
• Accrual
• Suspended Earnings
• Change Key

New Lease Accounting

There are several functions that are performed by the New Lease update [U0101], and each has specific General Ledger accounting associated with it. These functions are:

• Add an asset into inventory
• Book the lease
• Change the asset's financial information
• Delete an asset from inventory
• Disburse new lease payables

Add Asset

This transaction is performed by the Add Asset option of the New Lease update [U0101]. It places an asset that has never been on the LeasePak system into inventory. Once in inventory, the asset may be booked to a lease. A single transaction results:

Place the asset into inventory and record a payable for the cost of the equipment.

Book Lease

This transaction is performed by the Book Lease option of the New Lease update [U0101]. It places a lease onto the LeasePak system. There are different sets of transactions by accrual method of the lease (e.g., precomputed interest types, simple interest types, and operating lease types). Discussion of the transactions is separated into two areas:

• Transactions unique to the accrual method, and
  
  
• General transactions (applicable to any accrual method).

The following transactions are unique to precomputed interest leases (i.e., leases with an accrual method of Level Yield, Rule of 12/78ths, Rule of 12/ 78ths Half Month Convention, and Straight Line):

• Set up Contract Receivable and Unearned Income. Contract Receivable represents the total expected lease payments to be received over the lease term. Unearned Income represents the total amount of finance charge to be received over the lease term. These transactions also clear the asset(s) from inventory and record income from other charges.
  
  

  General Ledger Account	Amount
  DR Contract Receivable	Total Acquisition Cost of all Assets on Lease
  CR Inventory
  DR Contract Receivable	Total Other Charges of all Assets on the Lease
  CR Other Charges
  DR Contract Receivable CR Unearned Income	Minimum Lease Payment + Guaranteed Residual +Cap Reduction +Prorate (if Capitalized) -Total Acquisition Cost -Total Other Charges
  DR Residual	unguaranteed Residual
  CR Unearned Income

Notice that the prorate payment may be capitalized and earned as income over the life of the lease or it may be taken directly into income at lease commencement. The method of recognizing the income from the prorate payment is determined by the parameter PRORATE INCOME, found on the first screen of the New Lease Customizations option of the Portfolio update [U0212].

 

• Set up the Unearned Investment Tax Credit (ITC) to be earned for book purposes.
  
  

  GENERAL LEDGER ACCOUNT	AMOUNT
  DR Taxes Payable	Total ITC of the Asset on the Lease
  CR Unearned ITC

Notice that the Taxes Payable General Ledger account normally has a negative balance since LeasePak only records tax credits in the account.

LeasePak can bypass the accrual of book ITC income. The accrual or bypass of book ITC income and the method of book ITC income accrual are determined by the parameters BOOK ITC ACCRUE and INVESTMENT TAX CREDIT EXCLUDED FROM YIELD, respectively. Both of these parameters are found on the first screen of the New Lease Customizations option of the Portfolio update [U0212].

• Redistribute the total unearned income to the participant unearned accounts (vendor and investor), if applicable. The vendor may participate in either the income earnings or a percentage of the lease payment. The participation method is determined by the parameter VENDOR PARTICIPATES IN THE INCOME, found on the first screen of the New Lease Customizations option of the Portfolio update [U0212].

  The following transactions are only performed if the vendor and/or investor is participating in the income earnings of the lease. Refer to the Calculations document for the calculation of the portions of unearned income for the vendor and investor.
  

  General Ledger Account	Amount
  DR Unearned Income	Unearned Income (Vendor portion)
  CR Vendor Unearned Income
  DR Unearned Income	Unearned Income (Investor portion)
  CR Investor Unearned Income

   

  If the vendor is participating in a percentage of the lease payment, the vendor portion of receivable is separated from the lessor contract receivable. The vendor receivable is calculated by applying the percentage of vendor participation to the total lease contract receivable.

  General Ledger Account	Amount
  DR Vendor Receivable	Vendor Receivable
  CR Vendor Unearned Income

   

• If IDC is amortized (under FASB Statement No. 91), set up the Unamortized IDC amount and the bad debt, if any.
  
  

  General Ledger Account	Amount
  DR Unamortized IDC Cost	Broker Fees
  CR Commission Fees Payable
  DR Unamortized IDC Cost	Total IDC-Broker Fees
  CR IDC Offset
  DR Bad Debt Expense	Allowance for Bad Debt
  CR Allowance for Bad Debt

  
  These are the only transactions performed if IDC is amortized.

If IDC is not amortized (pre-FASB Statement No. 91), recognize initial direct cost (IDC) income, if applicable. Initial direct cost is normally composed of documentation fees (or a calculated amount), broker fees, and the allowance for bad debt. Refer to the Calculations document for more information on IDC.

The following transactions record initial direct cost (IDC) expense, commission fees payable, and income from documentation fees. They are always performed.

General Ledger Account	Amount
DR IDC Expense	Broker Fees
CR Commission Fees Payable
DR IDC Expense	Documentation Fees
CR Documentation Fees

Initial direct cost may either be recognized as income at lease booking or amortized over the lease life (in proportion to the lease's income amortization). The method of IDC treatment is determined by the parameter INITIAL DIRECT

COST EXCLUDED FROM YIELD, found on the first screen of the New Lease Customizations of the Portfolio update [U0212]. If IDC is recognized as income at lease commencement, the following transaction is performed:

General Ledger Account	Amount
DR Unearned Income	Broker Fees
CR Revenue	+Documentation Fees or a Calculated Amount

 

The following transaction is performed to record the allowance for bad debt.

General Ledger Account	Amount
DR Bad Debt Expense	Allowance for Bad debt
CR Allowance for Bad Debt

 

If bad debt is included in initial direct cost and if IDC is recognized as income at lease booking, the following transaction is performed. The parameter, BAD DEBT INCLUDED IN INITIAL DIRECT COST, found on the first screen of the New Lease Customizations option of the Portfolio update [U0212], specifies whether bad debt is part of IDC.

General Ledger Account	Amount
DR Unearned Income	Allowance for Bad Debt
CR Bad Debt

• Recognize amounts that are due at lease commencement, such as advance payment(s), the prorate payment, and cap reduction. Different transactions are recorded depending upon the payment method. There are three available options for payment of amounts due at lease commencement: cash received, invoice lessee for amounts due, or reduce the accounts payable to the vendor.

  If cash is received, the <debit account> is Clearing. If the lessee is invoiced, the <debit account> is Lease Payments Receivable. If the accounts payable to the vendor is reduced, the <debit account> is Accounts Payable.

  General Ledger Account	Amount
  DR <debit account>	Advance Payments
  CR Contract Receivable	+Cap Reduction +Prorate(if Income only)
  DR <debit account>	Prorate (if Income only)
  CR Lessor Income Precomputed
  DR <debit account>	Vendor Payment (Payment Participation only)
  CR Vendor Receivable
  DR Vendor Unearned Income	Vendor Payment (Payment participation only)
  CR Vendor Participation Payable

The following transactions are unique to simple interest leases (i.e., leases with an accrual method of simple fixed or simple floating). Within this group, leases using an accrual method of VV or VL use a different set of transactions.

Leases with an accrual method of VV or VL use the following transactions:

• Set up estimated Contract Receivable and estimated Unearned Income. Estimated receivable and income are calculated using the initial booking rates. These transactions also clear the asset(s) from inventory and record income from other charge
  
  

  General Ledger Account	Amount
  DR Contract Receivable	Total Acquisition Cost of all Assets on the Lease
  CR Inventory
  DR Contract Receivable	Total Other Charges of all Assets on the Lease
  CR Other Charges
  DR Contract Receivable CR Unearned Income	Estimated Lease Payments +Cap Reduction -Total Acquisition Cost -Total Other Charges
  DR Residual	Unguaranteed Residual
  CR Unearned Income

• Recognize amounts that are due at lease commencement, such as advance payment(s), the prorate payment, and cap reduction. Different transactions are recorded depending upon the payment method. There are three available options for payment of amounts due at lease commencement: cash received, invoice lessee for amounts due, or reduce the accounts payable to the vendor.

  If cash is received, the <debit account> is Clearing. If the lessee is invoiced, the <debit account> is Lease Payments Receivable. If the accounts payable to the vendor is reduced, the <debit account> is Accounts Payable.

  General Ledger Account	Amount
  DR <debit account> CR Contract Receivable	Advance Payment(s) +Cap Reduction
  DR <debit account>	Prorate
  CR Lessor Income Precomputed

   

All other simple interest leases use the following transactions:

• Set up Principal Outstanding and Residual. These transactions also clear the asset(s) from inventory, record income from other charges and documentation fees, and record the payable for commission fees.
  
  

  General Ledger Account	Amount
  DR Principal Outstanding	Total Acquisition Cost of all Assets on the Lease
  CR Inventory
  DR Principal Outstanding	Broker Fees
  CR Commission Fees Payable
  DR Principal Outstanding	Total Other Charges of all Assets on the Lease
  CR Other Charges
  DR Principal Outstanding	Documentation Fees
  CR Documentation Fees
  DR Residual-Simple	Residual

• Recognize amounts that are due at lease commencement, such as advance payment(s), the prorate payment, and cap reduction. Different transactions are recorded depending upon the payment method. There are three available options for payment of amounts due at lease commencement: cash received, invoice lessee for amounts due, or reduce the accounts payable to the vendor.

If cash is received, the <debit account> is Clearing. If the lessee is invoiced, the <debit account> is Lease Payments Receivable. If the accounts payable to the vendor is reduced, the <debit account> is Accounts Payable.

General Ledger Account	Amount
DR <debit account>	Advance Payment(s) + Cap Reduction
CR Principal Outstanding
DR <debit account>	Prorate
CR Lessor Income Precomputed

 

The following transactions are unique to operating leases.

• Record the original value of the leased asset(s). This transaction also clears the asset(s) from inventory.
  
  

  General Ledger Account	Amount
  DR Leased Equipment	Total Acquisition Cost of all Assets on Lease
  CR Inventory

   

• Record the Investment Tax Credit (ITC) to be deferred over the life of the lease.
  
  

  General Ledger Account	Amount
  DR Taxes Payable	Total ITC for all Assets on the Lease
  CR Deferred ITC

   

• Record the initial direct cost (IDC) to be deferred over the life of the lease. IDC consists of the commission fee to the broker and any documentation fee.

General Ledger Account	Amount
DR Deferred Charge	Commission Fee
CR Commission Fee Payable
DR Deferred Charge	Documentation Fee
CR Documentation Fee

 

• Recognize amounts that are due at lease commencement, such as advance payment(s), the prorate payment, and cap reduction. Also, adjust the operating lease income recognized to a straight line method, if necessary. There are three available options for payment of amounts due at lease commencement: cash received, invoice lessee for amounts due, or reduce the accounts payable to the vendor.

If cash is received, the <debit account> is Clearing. If the lessee is invoiced, the <debit account> is Lease Payments Receivable. If the accounts payable to the vendor is reduced, the <debit account> is Accounts Payable.

General Ledger Account	Amount
DR OP Lease Income Receivable CR Operating Lease Income	Advanced Payment(s) +Cap Reduction +Prorate
DR Unrecognized OP Lease Income CR Operating Lease	Average Monthly Lease Payment -Advance Payments

 

The following transactions are general and can apply to any type of lease (precomputed, simple, or operating).

• If a suspense item was entered, the entire remaining balance from suspense is cleared. If only a partial amount is used, the remaining balance is replaced into suspense in transaction 2.
  
  

  General Ledger Account	Amount
  DR Suspense	Remaining Suspense Balance
  CR Clearing

   

• Replace any dollar amounts to suspense, if applicable.

General Ledger Account	Amount
DR Clearing	Dollar Amount to Replace Suspense
CR Suspense

• Recognize amounts that are due at lease commencement, such as security deposit, recurring charges, and applicable use tax on advance payment(s), cap reduction, and/or the prorate payment. There are three available options for payment of amounts due at lease commencement: cash received, invoice lessee for amounts due, or reduce the accounts payable to the vendor.

If cash is received, the <debit account> is Clearing. If the lessee is invoiced, the <debit account> is Lease Payments Receivable (for security deposit and use tax) or Assessments Receivable (for recurring charges). If the accounts payable to the vendor is reduced, the <debit account> is Accounts Payable.

General Ledger Account	Amount
DR <debit account>	Security Deposit Received
CR Security Deposit Payable
DR <debit account> CR Use Tax Payable	Advanced Payments Tax Received +Cap reduction Tax Received +Prorate Payment Tax Received (if Use Tax is accounted for on an accrual basis)
DR <debit account> CR Assessed Fees	Advance Payments Tax Received +Cap Reduction Tax Received +Prorate Payment tax Received (if Cash Basis Use Tax accounting and the Lessee is invoiced)

• Record other disbursements, such as asset acquisition cost payables, commission fee payables, etc.

General Ledger Account	Amount
DR Accounts Payable	Total Asset Acquisition Cost Disbursed
CR Clearing
DR Commission Fees payable	Total Broker Fees Disbursed
CR Clearing

• Record funding interest changes. Funding interest is applicable only if the parameter FUNDING INTEREST IS USED, found on the first screen of the New Lease Customizations option of the Portfolio update [U0212], is set to Y (yes). Funding interest adjusts the accounts payable to the vendor by either increasing or decreasing the accounts payable.

The income account affected depends upon the type of the lease (precomputed, simple, or operating). If the lease is a precomputed interest lease, the <income account> is Lessor Income Precomputed. If the lease is a simple interest lease, the <income account> is Lessor Income Simple. If the lease is an operating lease, the <income account> is Operating Lease Income.

General Ledger Account	Amount
DR <income account>	Funding Interest Payable to Vendor
CR Accounts Payable
DR Accounts Payable	Funding Interest earned by Lessor
CR <income account

 

• Record the actual cash received and disbursed.

General Ledger Account	Amount
DR Cash CR Clearing	Amount Received at Lease Booking -Amount used from Suspense
DR Clearing CR Cash	Total Amount of Checks Disbursed +Commission Fee Check Disbursed

 

Change Asset

This transaction is performed by the Change Asset update [U0120]. It adjusts the financial information (starting cost, other charges, and residual) for an asset in inventory. Only a change to the starting cost results in a General Ledger transaction. Two different types of transactions are performed depending upon the status of the asset whose starting cost is changed. If the asset is in a pre-inventory status (i.e., no function of any kind has been performed on the asset, such as an accounts payable disbursement, terminating into inventory, etc.), the following transactions may be performed:

• If the starting cost is increased, adjust the inventoried value and accounts payable by the amount of increase.

General Ledger Account	Amount
DR Inventory	Increase in Starting Cost
CR Accounts Payable

 

• If the starting cost is decreased, adjust the inventoried value and accounts payable by the amount of decrease.

General Ledger Account	Amount
DR Accounts Payable	Decrease in Starting Cost
CR Inventory

If the lease is in an inventory status (i.e., some General Ledger function has been performed on the asset, such as an accounts payable disbursement, terminating into inventory, etc.), the starting cost may only be reduced (write down). The following transaction is performed:

• Adjust the inventoried value for the write down, and record the write down as a loss.

General Ledger Account	Amount
DR Loss on Sale or Termination	Write Down Amount
CR Inventory

 

Delete Asset

This transaction is performed by the Delete Asset option of the New Lease update [U0101]. It removes an asset with a pre-inventory status from inventory. An asset is placed in inventory through the Add Asset option of the New Lease update [U0101] with a pre-inventory status. Any function performed on the asset, such as an accounts payable disbursement, terminating into inventory, etc., changes the asset's status to inventory. Assets with an inventory status may not be deleted through the Delete Asset option of the New Lease update [U0101].

The following transaction is performed:

• Remove the asset from inventory and clear the accounts payable.

General Ledger Account	Amount
DR Accounts Payable	Inventoried Value (Acquisition Cost)
CR Inventory

 

Disburse Check

This transaction is performed by the Disburse Check option of the New Lease update. It disburses accounts payable to the vendor for equipment and to the broker for commission fees. The following transactions may be performed:

• Record a payable disbursement to the vendor for all or part of the acquisition cost of the equipment.

General Ledger Account	Amount
DR Accounts Payable	Vendor Disbursal Amount
CR Cash

• Record a payable disbursement to the broker for all or part of the commission fees for the lease.

General Ledger Account	Amount
DR Commission Fees Payable	Broker Disbursal Amount
CR Cash

 

Rebook Accounting

A rebook returns a lease to its original state as of lease booking (i.e., it performs accrual reversals back to the commencement date of the lease), allows the user to adjust the New Lease information, and then returns the lease to its current status based upon the change of information (i.e., it re- accrues the lease to its current accrual point).

In recording General Ledger transactions, the rebook shows only the necessary adjustment transactions. (The accrual reversal and re-accrual transactions are always shown, however). If no General Ledger change is required (i.e., the financial information of the lease is not changed during the rebook), then no rebook General Ledger transactions are produced, except for any applicable accrual and/or reversal transactions. An example of a

rebook which does not change the financial information of the lease is a rebook which only changes the commencement date of the lease and no other information.

An example of a rebook which does change the financial information of the lease is a rebook which increases the contract receivable of the lease by $100.00 (by changing the lease payment schedule). Assuming no other changes were made, only the following transaction is performed:

General Ledger Account	Amount
DR Contract Receivable	Change in Contract Receivable ($100.00)
CR Unearned Income

 

Assessment Accounting

Assessment accounting is performed in several areas within LeasePak. The Assessment option of the Assessment update [U0105] establishes an assessment receivable. The Assessment Waiver option of the Assessment update [U0105] clears an assessment receivable account. Assessment accounting is also performed by the Payment update [U0102] and several payable updates (e.g., the Property Tax/FHUT Payable update [U0119] and as an option of the Third Party Payable update [U0122]).

Most assessments may be accounted for on either a cash or an accrual basis. Recurring charges are always accounted for on a cash basis. Using a cash basis, the assessment income or payable is recorded in the General Ledger when the assessment is paid by the lessee. Using an accrual basis, the assessment income or payable is recorded in the General Ledger when the assessment is assessed to the lessee.

Each assessment (with the exception of use tax) has its own receivable and income/payable account on LeasePak. For example, the following accounts exist for Late Charges (an income assessment):

• Assessment Receivable - Late Charges
• Assessment Income - Late Charges

All other income assessments (e.g., Collection Fees, Assumption Fees, Legal Fees, Other Fees, etc.) have similar General Ledger accounts.

The following accounts exist for Property Tax and Federal Highway Use Tax (payable assessments):

• Assessment Receivable - Property Tax
• Assessment Payable - Property Tax

Use tax receivable is held in the Lease Payments Receivable account with the regular lease payments. There is, however, a separate Use Tax Payable account to hold use tax amounts as they become payable.

The General Ledger account Assessed Fees is used as an intermediate account for assessments accounted for on a cash basis. That is, instead of crediting an income or payable account when an amount is assessed, the Assessed Fees account is used as the offset to the assessment receivable account. Then, when the assessment is paid by the lessee and the amount should be recognized as income or a payable, Assessed Fees is cleared and the offsetting credit is made to the assessment income or payable account. Assessed Fees is not used if the assessment is accounted for on an accrual basis.

Assessment accounting may be generalized as follows:

• Assessment
  
  If the assessment is accounted for on a cash basis:

General Ledger Account	Amount
DR Assessment Receivable	Assessment Amount
CR Assessed Fees

 

If the assessment is accounted for on an accrual basis:

General Ledger Account	Amount
DR Assessment Receivable	Assessment Amount
CR Assessment Income/Payable

 

• Assessment Waiver

If the assessment is accounted for on a cash basis:

General Ledger Account	Amount
DR Assessed Fees	Assessment Waiver
CR Assessment Receivable

 

If the assessment is accounted for on an accrual basis:

General Ledger Account	Amount
DR Assessment Income/Payable	Assessment Waiver
CR Assessment Receivable

 

• Assessment Payment

The following transaction is always performed to clear the assessment receivable account:

General Ledger Account	Amount
DR Cash	Assessment Payment Amount
CR Assessment Receivable

If the assessment is accounted for on a cash basis, the following transaction is also performed:

General Ledger Account	Amount
DR Assessed Fees	Assessment Payment Amount
CR Assessment Income/Payable

 

• Assessment Payment Reversal

The following transaction is always performed to replace the amount of the reversal in the assessment receivable account:

General Ledger Account	Amount
DR Assessment Receivable	Assessment Payment Reversal Amount
CR Cash

 

• If the assessment is accounted for on a cash basis, the following transaction is also performed:

General Ledger Account	Amount
DR Assessment Income/Payable	Assessment Payment Reversal Amount
CR Cash

 

• Assessment Payable Disbursement

Use Tax, Property Tax, and Federal Highway Use Tax assessments are payables. Recurring Charges may be specified as either a payable or an income assessment. All other assessments (e.g., late charges, collection fees, etc.) are considered income assessments. The payable assessments have an additional disbursement function to clear their respective payable accounts. This disbursement occurs in the Vendor Income Participation report and the Vendor Payment

Participation report (run through End of Month), the Property Tax/Federal Highway Use Tax Payable update [U0119], and the Third Party Payable update [U0122] if a recurring charge is specified as a payable assessment.

The following transaction is performed:

General Ledger Account	Amount
DR Assessment Payable	Amount of Disbursement
CR Cash

 

Payment Accounting

The Payments update [U0102] processes a lease payment, which simply records cash received and reduces the receivable account. The following transactions are performed for non-interest bearing loans:

• Record the reduction of lease payments receivable and the receipt of cash.

General Ledger Account	Amount
DR Cash	Lease Payment + Use Tax Paid
CR Lease Payment Receivable

Payments made to assessments are detailed in the Assessment Accounting section.

• If the vendor participates in a percentage of the lease payment, an additional transaction is performed:

General Ledger Account	Amount
DR Vendor Unearned Income	Vendor portion of the Payment
CR Vendor Participation Payable

 

For interest bearing loans, the following transactions are performed:

• Payment
  
  

  General Ledger Account	Amount
  DR Cash	Total Payment Amount (Principal + Interest)
  CR Clearing
  DR Clearing	Interest Amount Paid
  CR loan Interest Receivable
  DR Clearing	Principal Amount Paid
  CR Loan Principal Receivable

   

• Adjustments may be required based on the recalculation of accrued interest and principal after the effective date of the payment. For example, if a principal payment is made, future Lease Interest Receivable must be reduced because it was originally calculated on a higher principal balance. Thus, the following transaction is created:

General Ledger Account	Amount
DR Lessor Income-Simple	Interest Adjustment
CR Loan Interest Receivable

 

• If the interest bearing loan is a P&I type, the principal due is also adjusted:

General Ledger Account	Amount
DR Loan Principal Receivable	Interest Adjustment
CR Principal Outstanding

 

If the lease is in a suspended earnings status, the following transactions are performed to reduce the suspended principal and income receivable accounts:

General Ledger Account	Amount
DR Cash or Clearing	Income portion of the Payment
CR Suspended Receivable (Income)
DR Cash or Clearing	Principal portion of the Payment
CR Suspended Receivable (Principal)

 

Payoff Accounting

There are several functions that are performed by the Payoff update [U0103], and each has specific General Ledger accounting associated with it. These functions are:

• Payoff a lease or asset
• Reverse a payoff for a lease or asset
• Terminate a lease or asset
• Reverse a termination for a lease or asset
• Record a sale of an asset in inventory

Payoff

This transaction is performed by the Payoff option of the Payoff update [U0103]. It removes all the General Ledger account information for an asset or a lease, whether it is paying off early or at maturity. Both a lease and an asset payoff use the same set of transactions when updating the General Ledger - the dollar amounts for the transactions, however, reflect the lease or the asset (portion of a lease) being paid off.

The following transactions result:

• If a suspense item was entered, the entire remaining balance from suspense is cleared. If only a partial amount is used, the remaining balance is replaced into suspense in transaction 2.

General Ledger Account	Amount
DR Suspense	Remaining Suspense Balance
CR Clearing

 

• Replace any dollar amounts to suspense, if applicable.

General Ledger Account	Amount
DR Clearing	Dollar amount to replace Suspense
CR Suspense

• For precomputed interest leases, clear the remaining contract receivable, unguaranteed residual, and lessor, vendor, investor, and book ITC unearned. There is a remaining contract receivable and unearned only if the asset or lease is paying off early (before lease maturity). The offsetting account is always Clearing.

General Ledger Account	Amount
DR Clearing CR Contract Receivable	Remaining Contract Receivable +Guaranteed Residual
DR Clearing	Unguaranteed Residual
CR Residual
DR Unearned Income	Remaining Lessor Unearned
CR Clearing
DR Unearned ITC	Remaining Book ITC Unearned
CR Taxes Payable
DR Vendor Unearned Income	Remaining Vendor Unearned
CR Clearing
DR Investor Unearned Income	Remaining Investor Unearned
CR Clearing

 

• Account for any timing differences between the actual earning of ITC and the book recognition of ITC income. For example, if a $10,000.00 5-year class piece of equipment is sold in its third year, $600.00 of the total $1,000.00 of ITC claimed must be recaptured. Assume, for book purposes, $535.00 of ITC income has already been recognized. In reality, only $400.00 of ITC income has actually been earned; however, $535.00 has been recorded as earned on the books. Therefore, an adjustment of $135.00 is required.

General Ledger Account	Amount
DR Reserve for Recapture Expense	Book ITC Income Earned -ITC Retained for Tax purposes
CR Taxes Payable

 

• For simple interest leases, clear the principal outstanding and the residual accounts. There is a principal outstanding only if the asset or lease is paying off early. The offsetting account is always Clearing.

General Ledger Account	Amount
DR Clearing	Principal Outstanding
CR Principal Outstanding
DR Clearing	Residual
CR Residual - Simple

 

• Recognize any additional income resulting from a special payoff method (e.g., NPV of remaining payment stream). The difference between the calculated payoff method and the net book value of the unit or lease is recognized as additional income. Also, another transaction using the same debit and credit pair may be written for any ITC fees charged. ITC fees are another type of payoff charge. If the lease is a precomputed interest lease, the <credit account> is Lessor Income - Precomputed. If the lease is a simple interest lease, the <credit account> is Lessor Income - Simple.

General Ledger Account	Amount
DR Clearing	Additional Income from Payoff Calculation
CR <credit account

• Clear any accrued but unbilled (not due) lease income. This transaction is performed for both precomputed interest leases and simple interest leases.

General Ledger Account	Amount
DR Clearing	Lessor, Vendor, Investor, and Book ITC Period to Date Income
CR Lease Income Receivable

• Clear the portion of the security deposit used for the payoff.

General Ledger Account	Amount
DR Security Deposit	Portion of the Security Deposit used
CR Clearing

 

• Record the termination fees charged.

General Ledger Account	Amount
DR Clearing	Termination Fees
CR Termination Fees

 

• Record any sales tax for the payoff that was paid, if any.

General Ledger Account	Amount
DR Clearing	Sales Tax for the Payoff
CR Use Tax Payable

 

• Record any gain on the payoff, if any.

General Ledger Account	Amount
DR Clearing	Gain on the Payoff
CR Gain on Sale of Equipment

 

• Record any loss on the payoff, if any.

General Ledger Account	Amount
DR Loss on Sale of Equipment	Loss on Payoff
CR Clearing

 

• Record a portion or all of the loss, if any, against the allowance for bad debt.

General Ledger Account	Amount
DR Allowance for Bad Debt	Loss Charged to Allowance for Bad Debt
CR Clearing

 

• Record the actual amount of cash received.

General Ledger Account	Amount
DR Cash	Actual Cash Received
CR Clearing

 

• If the lease is in a suspended earnings status and is terminated or charged off, the amount of suspended income collected (i.e., paid by the lessee) is applied against the outstanding principal balance. The remainder of the suspended income earned and unpaid is backed out.

General Ledger Account	Amount
DR Suspended Income Accrued	PTD Income (unbilled)
CR Suspended Income Receivable (unbilled)
DR Suspended Income Accrued	Suspended Income Collected
CR Contract Receivable (Precomputed) or Principal Outstanding (Simple)
DR Suspended Income Accrued CR Suspended Receivable (Income)	Suspended Income Accrued -PTD Income (unbilled) - Suspended Income Collected

 

• Any suspended IDC accrued for the lease is reversed out and recognized as Unamortized IDC Cost.

General Ledger Account	Amount
DR Unamortized IDC Cost	Suspended IDC Accrued
CR Suspended IDC Accrued

 

Termination

This transaction is performed by the Termination option of the Payoff update [U0103]. It removes all the General Ledger account information for an on-lease asset or a lease, whether it is terminating early or at maturity, and places the asset(s) into inventory. Both a lease and an asset termination use the same set of transactions when updating the General Ledger.

The following transactions result:

• If a suspense item was entered, the entire remaining balance from suspense is cleared. If only a partial amount is used, the remaining balance is replaced into suspense in transaction 2.

General Ledger Account	Amount
DR Suspense	Remaining Suspense Balance
CR Clearing

 

• Replace any dollar amounts to suspense, if applicable.

General Ledger Account	Amount
DR Clearing	Dollar Amount to replace in Suspense
CR Suspense

 

• For precomputed interest leases, clear the remaining contract receivable, unguaranteed residual, and lessor, vendor, investor, and book ITC unearned. There is a remaining contract receivable and unearned only if the asset or lease is terminating early (before lease maturity). The offsetting account is always Inventory.

General Ledger Account	Amount
DR Inventory CR Contract Receivable	Remaining Contract Receivable + Guaranteed Residual
DR Inventory	Unguaranteed Residual
CR Residual
DR Unearned Income	Remaining Lessor Unearned
CR Inventory
DR Unearned ITC	Remaining Book ITC Unearned
CR Inventory
DR Vendor Unearned Income	Remaining Vendor Unearned
CR Inventory
DR Investor Unearned Income	Remaining Investor Unearned
CR Inventory

 

• For simple interest leases, clear the principal outstanding and the residual accounts. There is a principal outstanding only if the asset or lease is terminating early. The offsetting account is always Inventory.

General Ledger Account	Amount
DR Inventory	Principal Outstanding
CR Principal Outstanding
DR Inventory	Residual
CR Residual Simple

 

• Recognize any additional income resulting from a special termination method (e.g., G12 - recognize the scheduled first 12 months of income if the lease is terminating within the first 12 months of the lease). The difference between the calculated termination method and the net book value of the asset or lease is recognized as additional income. Also, another transaction using the same debit and credit pair may be written for any ITC fees charged. ITC fees are another type of termination charge. If the lease is a precomputed interest lease, the <credit account> is Lessor Income - Precomputed. If the lease is a simple interest lease, the <credit account> is Lessor Income - Simple.

General Ledger Account	Amount
DR Inventory	Additional Income from Termination Calculation
CR <credit account>

 

• Accrued but unbilled (not due) lease income is included in the termination amount calculation. Recognize the receipt of the income. This transaction is performed for both precomputed interest leases and simple interest leases.

General Ledger Account	Amount
DR Clearing	Lessor, Vendor, Investor, and Book ITC Period-to-date Income
CR Lease Income Receivable

 

• Clear the portion of the security deposit used for the termination.

General Ledger Account	Amount
DR Security Deposit Payable	Portion of the Security Deposit used
CR Clearing

 

• Record the termination fees charged.

General Ledger Account	Amount
DR Clearing	Termination Fees
CR Termination Fees

 

• Record any loss on the termination, if any.

General Ledger Account	Amount
DR Loss on Sale or Termination	Loss on the Termination
CR Clearing

 

• Record a portion or all of the loss, if any, against the allowance for bad debt.

General Ledger Account	Amount
DR Allowance for Bad debt	Loss charged to allowance for Bad Debt
CR Clearing

 

• Record the actual amount of cash received.

General Ledger Account	Amount
DR Cash	Actual cash received
CR Clearing

 

• Any suspended IDC accrued for the lease is reversed out and recognized as Unamortized IDC Cost.

General Ledger Account	Amount
DR Unamortized IDC Cost	Suspended IDC Accrued
CR Suspended IDC Accrued

 

Sale of Asset in Inventory

This transaction is performed by the Sale of asset in Inventory option of the Payoff update [U0103]. It removes an asset from inventory.

The following transactions result:

• If a suspense item was entered, the entire remaining balance from suspense is cleared. If only a partial amount is used, the remaining balance is replaced into suspense in transaction 6.

General Ledger Account	Amount
DR Suspense	Remaining Suspense Balance
CR Clearing

 

• Clear the asset from inventory.

General Ledger Account	Amount
DR Clearing	Inventoried value of the Asset
CR Inventory

 

• Record a gain on sale of the equipment, if any. The gain is calculated as the difference between the sales price and the inventoried value if the sales price is greater than the inventoried value.

General Ledger Account	Amount
DR Clearing CR Gain on Sale of Equipment	Sales Price -Inventoried Value

 

• Record a loss on sale of the equipment, if any. The loss is calculated as the difference between the inventoried value and the sales price if the inventoried value is greater than the sales price.

General Ledger Account	Amount
DR Loss on Sale of Equipment	Inventoried Value Sales Price
CR Clearing

 

• Record the total amount of ITC recaptured for tax purposes.

General Ledger Account	Amount
DR Reserve for Recapture Expense	Amount of ITC Recaptured
CR Taxes Payable

 

• Replace any dollar amounts to suspense, if applicable.

General Ledger Account	Amount
DR Clearing	Dollar amount to replace in Suspense
CR Suspense

 

• Record the proceeds of sale (actual cash received).

General Ledger Account	Amount
DR Cash	Actual Cash Received
CR Clearing

 

• Record adjustment to inventory (reduce inventoried value).

General Ledger Account	Amount
DR Depreciation expense
CR Inventory

 

• Record adjustment to inventory (increase inventoried value).

General Ledger Account	Amount
DR Inventory
CR Depreciation expense

 

Accrual Accounting

The Accrual process recognizes income and sets up the accounts receivables for the lease. Income is recognized through various methods, such as the level or constant yield (FASB 13) method, Rule of 12/78ths, Straight Line, etc. Refer to the Calculations document for more information about the different types of accrual methods.

The following transactions result:

• Recognize the lease income each month for the lessor, vendor, investor and book ITC.

General Ledger Account	Amount
DR Lease Income Receivable	Lessor Income
CR Lessor Income or Lessor Income - Simple or Operating Lease Income
DR Lease Income Receivable	Vendor Income
CR Vendor Participation Payable
DR Lease Income Receivable	Investor Income
CR Investor Participation Payable
DR Lease Income Receivable	Book ITC Income
CR ITC Income

 

• Amortize the suspended initial direct cost (under FASB Statement No. 91):

General Ledger Account	Amount
DR IDC Amortization	IDC Amortization
CR Unamortized IDC Cost

 

• If the payment is due this accrual, then reduce the unearned General Ledger accounts and clear the Lease Income Receivable account for precomputed interest leases:

General Ledger Account	Amount
DR Unearned Income	Period-to-date Lessor Income
CR Lease Income Receivable
DR Vendor Unearned Income	Period-to-date Vendor Income
CR Lease Income Receivable
DR Investor Unearned Income	Period-to-date Investor Income
CR Lease Income Receivable
DR Unearned ITC	Period-to-date Book ITC Income
CR Lease Income Receivable

 

For simple interest leases (non-interest bearing loans), transfer the interest portion of the payment to Lease Payments Receivable. The principal portion of the payment is transferred in transaction 4.

General Ledger Account	Amount
DR Lease Payments Receivable	Period-to-date Lessor Interest
CR Lease Income Receivable

 

For interest bearing loans, transfer the interest portion of the payment to Loan Interest Receivable:

General Ledger Account	Amount
DR Loan Interest Receivable	Period-to-date Lessor Interest
CR Lease Income Receivable

 

Period-to-date income is the accumulated income accrued since the last time a lease payment was due. For monthly leases, a payment is due each month the lease is accrued, therefore period-to-date income for monthly leases always equals the monthly accrued income. For quarterly leases, the period-to-date income when a payment is due equals the current month's income accrued plus the previous two month's income accrued.

• If a payment is due this accrual, transfer the amount of the payment from Contract Receivable to Lease Payments Receivable for precomputed interest leases:

General Ledger Account	Amount
DR Lease Payments Receivable	Payment Amount Due
CR Contract Receivable

 

For simple interest leases (non-interest bearing loans), transfer the principal portion of the payment from Principal Outstanding to Lease Payments Receivable.

General Ledger Account	Amount
DR Lease Payments Receivable	Principal portion of the Payment
CR Principal Outstanding

For interest bearing loans, transfer the principal portion of the payment to Loan Principal Receivable:

General Ledger Account	Amount
DR Loan Principal Receivable	Principal portion of the Payment
CR Principal Outstanding

 

• Record the use tax assessment for the payment. If use tax is accounted for on an accrual basis:

General Ledger Account	Amount
DR Lease Payments	Use Tax
CR Use Tax Payable

 

Otherwise, if use tax is accounted for on a cash basis:

General Ledger Account	Amount
DR Lease Payments Receivable	Use Tax
CR Assessed Fees

• If the lease is in a suspended earnings status, the normal accrual process will calculate principal and income according to the contract (i.e., as the borrower would view the loan). Income and receivables accrued are placed in the suspended General Ledger accounts.

The following transactions are performed if a precomputed interest type lease is in a suspended earnings status:

General Ledger Account	Amount
DR Suspended Income Receivable (unbilled)	Monthly Income Accrued
CR Suspended Income Accrued

 

• If the payment is due:

 

General Ledger Account	Amount
DR Unearned Income	PTD Lessor Income
CR Suspended Income Receivable (Unbilled)
DR Vendor Unearned Income	PTD Vendor Income
CR Suspended Income Receivable (Unbilled)
DR Investor Unearned Income	PTD Investor Income
CR Suspended Income Receivable (Unbilled)
DR Suspended Receivable (Income)	PTD Income
CR Contract Receivable
DR Suspended Receivable (Principal)	Principal portion due
CR Contract Receivable

 

The following transactions are performed if a simple interest type lease is in a suspended earnings status:

 

General Ledger Account	Amount
DR Suspended Income Receivable (Unbilled)	Income Accrued
CR Suspended Income Accrued

 

• If the payment is due:

General Ledger Account	Amount
DR Suspended Receivable (income)	PTD Income
CR Suspended Income receivable (unbilled)
DR Suspended Receivable (principal)	Principal portion due
CR Principal outstanding

 

The following transactions are performed if an operating type lease is in a suspended earnings status:

General Ledger Account	Amount
DR Suspended Income Receivable (unbilled)	Income Accrued
CR Suspended Income Accrued

 

• If the payment is due:

General Ledger Account	Amount
DR Suspended Receivable (income)	Payment Amount due
CR Suspended Income Receivable (unbilled)

 

Suspended Earnings Accounting

When income earnings are suspended for a lease (the lease is placed in a suspended earnings status from an active status), the following General Ledger transaction is performed to transfer the unbilled (but accrued) interest to its parallel suspended G/L account:

General Ledger Account	Amount
DR Suspended Income Receivable (unbilled)	PTD Income (unbilled)
CR Lease Income Receivables

 

When income earnings are reinstated for the lease (the account is changed from a suspended earnings status to an active status), the following General Ledger transactions are performed to move income and receivables from the suspended G/L accounts to the normal G/L accounts:

General Ledger Account	Amount
DR Lease Income receivable	All PTD Income
CR Suspended Income Receivable (unbilled)
DR Lease payments Receivable	Income Outstanding (on RAR)
CR Suspended Receivables (income)
DR Lease Payments Receivable	Principal Outstanding (on RAR)
CR Suspended Receivables (principal)
DR Suspended Income Accrued	Lessor Income Accrued while on Suspended Earnings Status
CR Lessor Income (Precomputed or Simple
DR Suspended Income Accrued	Vendor Income Accrued while on Suspended Earnings Status
CR Vendor Participation Payable
DR Suspended Income Accrued	Investor Income Accrued while on Suspended Earnings Status
CR investor Participation Payable
DR Suspended Income Accrued	Residual Income Accrued while on Suspended Earnings Status
CR Residual Income

 

Change Key Accounting

The Change Lease Key update [U0114] and the Change Key option of the Change Asset update [U0120] allow the user to transfer a lease or asset from one accounting unit (portfolio, company, region, and office) to another accounting unit. A utility, Batch Change Key, is also available which allows input of a file containing many leases which will all be changed at once from one accounting unit to another. The accounting that is performed for this move is simply a transfer of the appropriate General Ledger amounts from one portfolio, company, region, office to another.

Two sets of related transactions are performed, one for the old accounting unit (the one from which the lease or asset is leaving) and one for the new accounting unit (the one to which the lease or asset is moving). The offset for all transactions is Clearing. For example:

General Ledger Account	Amount
DR Clearing	Residual Value (Old Office)
CR Residual
DR Residual	Residual Value (New Office)
CR Clearing

 

Each General Ledger amount for the lease would have similar transactions. The following is a list of amounts which are transferred:

• Contract Receivable + Guaranteed Residual (precomputed interest lease only)
• Residual (precomputed interest lease only)
• Unearned Income (precomputed interest lease only)
• Unearned ITC (precomputed interest lease only)
• Vendor Unearned Income (precomputed interest lease only)
• Investor Unearned Income (precomputed interest lease only)
• Principal Outstanding (simple interest lease only)
• Residual - Simple (simple interest lease only)
• Accounts Payable
• Lease Payments Receivable (including use tax)
• Assessment Receivable - Late Charge
• Assessment Receivable - Collection Fees
• Assessment Receivable - Assumption Fees
• Assessment Receivable - Property Tax
• Assessment Receivable - Legal Fees
• Assessment Receivable - Payment Extensions
• Assessment Receivable - ITC Fees
• Assessment Receivable - Federal Highway Use Tax
• Assessment Receivable - Lease Rewrite Fees
• Assessment Receivable - Lease Extensions
• Assessment Receivable - Other Fees
• Assessment Receivable - Escrow Recurring Charge
• Assessment Payable - Escrow Recurring Charge
• Security Deposit
• Commission Fees Payable
• Suspense
• Lease Income Receivable
• Unamortized IDC Cost
• Inventory (an off-lease asset is transferred)
• Suspended IDC Accrued

An effective date for the change may be entered. If that date is in the past and subsequent payments have been made, those payments are automatically reversed and reapplied. Changes to multiple leases initiated through the Batch Change Key utility (e.g., securitization) use the Batch Payments module [U0415] to reapply payments which have been reversed.

Reconciliation Procedures

The purpose of the reconciliation is to prove the balances in the General Ledger accounts as shown on the General Ledger Entries Listing report [R0406] using various detail reports. The reconciliation should be performed at the office level at least twice monthly (mid-month and month- end). It is strongly recommended that reconciliation be performed at least once a week after installing new releases of the LeasePak system which include accounting changes.

All reconciliation reports must be generated at the same time with no updating being done while the reports are being generated.

The reconciliation process consists of the following steps:

• Generate the following reports, selecting "ALL" as the selection criteria

  [R0203] Suspense Review report
  [R0406] General Ledger Entries Listing report
  [R0403] General Ledger Reconciliation report
  [R0404] Accounts Receivable Balancing report
  [R0407] Income Receivable Balancing report
  [R0408] Accounts Payable Balancing report
  [R0607] Assessment Receivable Aging report
  [R0609] Suspended Earnings
  [R0901] Trial Balance report
  [R1001] Off-lease Inventory report

• Review the General Ledger Reconciliation report [R0403] for each office, looking for any value other than zero in the column headed DIFFERENCE. If the value for each item is other than zero, the account is 'out of balance'.
  
  
• Reconcile the General Ledger account balances shown on the General Ledger Entries Listing report [R0406] for each office using the following detail reports:
  • Trial Balance report [R0901]
    Reconcile contract receivable, unguaranteed residual (precomputed interest leases), lessor unearned, ITC unearned, vendor unearned, investor unearned, principal, and residual (simple interest leases) to their corresponding General Ledger accounts.
    
    
  • Accounts Receivable Balancing report [R0404]
    Reconcile payment + tax amount outstanding to Lease Payments Receivable. Reconcile the Suspended Receivable (income) and Suspended Receivable (principal) General Ledger account balances.
    
    
  • Accounts Payable Balancing report [R0408]
    Reconcile accounts payable, security deposit, commission fees, vendor participation, investor participation, use tax, property tax and FHUT to their corresponding General Ledger accounts.
    
    
  • Suspense Review report [R0203]
    Reconcile the remaining balance of suspense items to Suspense.
    
    
  • Off-lease Inventory report [R1001]
    Reconcile inventoried value of the equipment to Inventory.
    
    
  • Income Receivable Balancing report [R0407]
    Reconcile total period-to-date rental income to Lease Income Receivable.
    
    
  • Assessments Receivable Aging report [R0607]
    Reconcile each assessment receivable to their corresponding General Ledger accounts.
    
    
  • Suspended Earnings report [R0609]
    Reconcile the Suspended Income Receivable (unbilled) and Suspended Income Accrued General Ledger account balances.

   

Note: General Ledger accounts are listed on the General Ledger Listing if there is a balance in the account or if there was any debit/credit activity to the account.

© 2001 by McCue Systems Incorporated.
All rights reserved.

The information contained in this document is the property of McCue Systems, Inc. Use of the information contained herein is restricted. Conditions of use are subject to change without notice. McCue Systems, Inc. assumes no liability for any inaccuracy that may appear in this document; the contents of this document do not constitute a promise or warranty. The software described in this document is furnished under license and may be used or copied only in accordance with the terms of said license. Unauthorized use, alteration, or reproduction of this document without the written consent of McCue Systems, Inc. is prohibited.