General Ledger Accounting

Contents

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.

Contents

 

The following is a general description of each LeasePak General Ledger account, segregated by type.

 

Assets

 

Liabilities

 

Income

 

Expenses

 

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 AccountAMOUNT
DR Debit AccountAmount of Change
CR Credit Account 

General Ledger accounting for the following functions are detailed:

 

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 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.

General Ledger Account Amount
DR Inventory Acquisition Cost of the Equipment
CR Accounts Payable  

 

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:

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):

 

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].

 

 

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].

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 

 

 

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:

 

All other simple interest leases use the following transactions:

 

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.

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

 

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 ReceivableCR Operating Lease Income Advanced Payment(s)
+Cap Reduction
+Prorate
  
DR Unrecognized OP Lease IncomeCR 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).

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

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

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 

 

General Ledger Account Amount
DR CashCR 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:

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

 

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:

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:

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:

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

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):

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):

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:

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 

 

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 

 

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 

 

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 

 

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

 

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:

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.

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:

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

 

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

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:

General Ledger Account Amount
DR Suspense Remaining Suspense Balance
CR Clearing  

 

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


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 

 

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

 

General Ledger Account
 
Amount
 
DR ClearingPrincipal Outstanding
CR Principal Outstanding 
  
DR ClearingResidual
CR Residual - Simple 

 

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

General Ledger Account Amount
DR Clearing Lessor, Vendor, Investor, and Book ITC Period to Date Income
CR Lease Income Receivable 
General Ledger Account Amount
DR Security Deposit Portion of the Security Deposit used
CR Clearing  

 

General Ledger Account Amount
DR Clearing Termination Fees
CR Termination Fees 

 

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

 

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

 

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

 

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

 

General Ledger Account Amount
DR Cash Actual Cash Received
CR Clearing  

 

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

 

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:

General Ledger Account Amount
DR Suspense Remaining Suspense Balance
CR Clearing  

 

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

 

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 

 

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

 

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

 

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

 

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

 

General Ledger Account Amount
DR Clearing Termination Fees
CR Termination Fees 

 

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

 

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

 

General Ledger Account Amount
DR Cash Actual cash received
CR Clearing 

 

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:

General Ledger Account Amount
DR Suspense Remaining Suspense Balance
CR Clearing  

 

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

 

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

 

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

 

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

 

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

 

General Ledger Account Amount
DR Cash Actual Cash Received
CR Clearing  

 

General Ledger Account Amount
DR Depreciation expense 
CR Inventory 

 

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:

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 

 

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

 

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.

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 

 

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 

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 

 

 

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 

 

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 

 

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:

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:

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.

 

LeasePak  Reference Guide

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