Creating lease modifications

When the lease agreement changes, you can use the Modification to update the term or the lease payments.
  1. Select Leases.
  2. Open a lease record.
  3. Click the Modification button.
  4. Select a Modification Date and provide a Description.
  5. To modify the terms, select the Modify Terms check box and specify this information:
    Extension or Reduction
    Select whether the term is extended or reduced, and specify the number of months for the adjustment.
    Modification Length
    Specify the new lease length in months. The value is used to modify the end date of the lease.
    Implicit Interest Rate
    If the modification changes the implicit interest rate, then specify the new rate.
  6. The original values of the lease and the modified values are displayed. Verify that the changes are correct.
  7. Click Next. The existing payment schedule is displayed.
  8. To specify an individual payment, click the add payment icon and complete the payment information.
  9. To create a recurring payment, select the first row of the payment schedule, select Modify Payments, and specify this information:
    Begin
    Specify the starting date of the modified payments.
    End
    Specify the new ending date of the lease if the term is modified, otherwise specify the original end date of the lease.
    Action
    Select the action to take on the payments. You can add, update, or delete.
    First Due Date
    Specify the first due date for the new payments. The recurring payments are created from this date at the frequency that is specified.
    Frequency
    Select the frequency of the payment. Valid values are weekly, monthly, quarterly, yearly, or semi-annually.
    Payment Amount
    Specify the payment amount.
  10. Verify that the payment schedule is correct and click Next.
  11. Verify that the lease amortization schedule is correct. The blue alert indicates the date of the modification.
  12. Click Next. The summary page is displayed.
  13. Verify that the remaining lease costs are correct.
  14. Click Adjust Asset. Select the asset to modify. Make note of the new asset basis. You will use the asset basis in step 16.
  15. Select the Items tab of the asset and open the item record.
  16. If no asset items were added, then specify this information:
    Book Adjustment Date
    Specify the date of the modification.
    Cost
    Specify the new asset basis from step 14.
  17. If an additional asset item is added to the lease, then specify this information:
    Book Adjustment Date
    Specify the date of the modification.
    Purchase Date
    Specify the date that the asset was purchased.
    Cost
    If only one new asset exists, then this field is filled to balance the lease ROU and asset basis. If multiple new asset items exist, then specify the cost of each.
  18. To remove an item from the lease, use these steps:
    1. Specify an adjustment date for an asset item. To delete an asset item, the asset must be in a state of adjustment in progress.
    2. Select the asset item and click Delete.
    3. Verify that the asset basis that was calculated in the modification in step 14 equals the asset basis of the remaining asset items.
  19. Select the Adjustments tab to verify the adjustment to the asset or select the Transactions tab to view the unreleased transactions for the modification
  20. Click Release.
  21. Navigate back to the lease modification record.
  22. Click Release Modification.

    You can also click Finish. Review the pending changes and from the lease, click Release Modification