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In this video I will show you the basic functionality Asset Accountant has for
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managing leases as part of managing an asset within the system. From here you
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can see the fixed asset register. I'm going to switch to the accounts view so
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you can see the register for FY23. I'm now going to add a leased asset. So
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adding the lease asset in this interface I'm going to add a leased
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laptop with a reference number 123. I'm going to choose that this is the
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computer equipment and that we're going to own it afterwards. The lease start
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date will be the 1st of July 2022. Then I can input my lease schedule. So I'm
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going to say I financed $2,000. I have an initial payment of $200 and then I
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have 12 payments of $100 and a final balloon payment of $650. Then I can
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generate the schedule. Asset Accountant will work out the interest rate based on
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the actual month over 365 day method. Then we'll use the schedule. You can see
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here this is then displaying the split between principal and interest for each
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month. I then have an option to change the amount capitalized. If I am using
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another system for doing depreciation I can create a asset with amount
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capitalized of zero and Asset Accountant will then just manage the
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lease accounting entries. In this case I'm just going to assume that I'm
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capitalizing $2,000 and I can set the tax and the accounts treatments for
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depreciation at the same value as the amount financed. So I'm going to save
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that. That will then create the asset within the system so we're now managing
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not just the depreciation which you can see here, the depreciation over the life
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of the asset, it's also managing the lease liability. So I can expand that and
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you can see the interest calculations being posted to the lease and the
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payments being removed each month. From this screen I can then navigate to my
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journals and you can see here my journals are up to date up to the 30th
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of June. So now I'm going to create the journal. In order to demonstrate the way
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Asset Accountant manages all of the entries in the journal for you I'm going
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to just initially select the lease additions and the lease movements in the
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journal that I create. So I've selected the lease additions and the lease
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movements and you can see that's marked and what that has done is created
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a journal that has for computer equipment which is the asset that I've
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just created the lease. It's created the current and the non-current lease
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liability within the system so you can see here the setup so this is the new
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lease that's been created. We have also created a cost entry which is then
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posted to the account that you've set up for managing the costs on the balance
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sheet and we also calculate the expired and the unexpired interest and map those
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to the relevant accounts. If you do not use the unexpired interest method of
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accounting you can simply map those to the same accounts as the current and
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non-current lease liabilities and the net effect will be to show you just the
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outstanding principle in relation to each lease. Finally there is a lease
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payment clearing account that is mapped and the payments will be posted to that
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account for you to reconcile that against your bank reconciliation and
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alongside that is the interest charge that will go to the
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profit and loss account for the month in question. So that journal is then created
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I can post that from within there that just shows the lease additions and the
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lease movements and then let's just post the or let's just have a look at the
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journal that's created to the end of August. Again I'm not going to
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select the asset additions and depreciation those are just standard
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journals but what I will show you here is the movements in the lease for the
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following month so I create those for the month of August and that journal
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will get created you can see the interest charges posted for August and
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then we have movements between the non-current and the current lease
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liability so you can see that $650 that I entered as the balloon payment was due
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in 13 months time so when I roll forward a month that is now becoming due in less
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than a year so that's been posted to the current lease liability and the
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non-current lease liability account will be zero. All of that can then be exported
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and posted to the accounting system which will then accurately reflect the
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state of the accounting for this particular lease. Finally there are a
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number of reports that I can then generate so from the reports tab here I
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can choose any one of these individual reports about the leases that are
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in the system so I can have a summary of all the leased assets that are
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included, a schedule that shows when the leases are due to expire, some further
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information that compares the net book value with the outstanding principal for
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the asset and then two reports that show the finance balances over the period in
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question so the amount the principal outstanding month by month over the
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following 12 months and the amounts paid in respect of those leases so you
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can manage your cash flow.
