Closing or retiring a lease

LM45.1 has two options for terminating a lease: closing or retiring. Closing a lease involves terminating the lease on its scheduled end date; retiring a lease involves terminating a lease before its scheduled end date.

• Before you can close a period, you must close any lease that has an end date within that period.

• You can retire a lease at any time. It does not affect period closing. For example, you can change an asset from a leased asset to a purchased asset before the lease is scheduled to end.

• If an operating lease that is recorded on a straight-line basis is retired before the end of the lease term, then a journal entry is created to adjust rent expense by the accumulated deferred rent balance.

• If unposted, accrued transactions exist and a lease is terminated before the end of the lease term, then a journal entry is created to debit the accrued rent account and credit the rent expense so that the accrued rent balance is reduced to zero.

LM45.1 will not close or terminate a lease until all the payments scheduled for that lease were fully processed.

If you have created a lease in error and have not processed any payments for it, then you can use Lease Purge (LM300) to purge the lease from the Lease Management application.