Lease Synchronization

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Introduction

LeaseAccelerator was designed from the ground up to support the lease accounting standards. A dedicated lease accounting subledger tracks all the journal entries such as amortization, depreciation, interest, and operating expense for each property. To utilize this feature, lease contracts entered in LeaseAccelerator’s Real Estate Manager must be synchronized with LeaseAccelerator’s Lease Accounting Manager.

By synchronizing each lease contract, information is sent via API to the Lease Accounting Manager database and a lease record is created within Lease Accounting Manager. All the critical lease information, including participants, lease terms and details, payment information, and end of term options are included in that lease record. Once the lease is synchronized, there is an approval process within both Real Estate Manager and Lease Accounting Manager to ensure accurateness before the lease generates journal entries and may be exported to a company’s ERP, along with all the other lease contracts.

The basic steps in the lease synchronization process after a lease contract is entered in Real Estate Manager include:

1. Performing the Lease Accounting Readiness Review (Real Estate Manager)

2. Approve review (Real Estate Manager)

3. Synchronize with Lease Accounting Manager (Real Estate Manager)

4. Book lease (Lease Accounting Manager)

5. Classify lease (Lease Accounting Manager)

6. Approve lease (Lease Accounting Manager)

Each step in the process is outlined in greater detail in this guide.

Checking for Lease Accounting Readiness

Prior to performing the Lease Accounting Readiness Review, users have the ability to check for critical data. This data includes pertinent financial and participant information that is required in Lease Accounting Manager and must be provided prior to any synchronization.

There are two ways to check for Lease Accounting Readiness:

1. Within the Contract Details tab, along the right side of the workspace, missing items will be red under the Required Data for Lease Accounting section.

2. While in the edit mode of a contract, users can scroll to the bottom of the workspace and click the button to Check for Lease Accounting Readiness. This will display a pop-up listing any missing items that are required.

   
   

Populating Required Lease Accounting Fields

If you have checked for Lease Accounting Readiness and find that you are missing required items, follow these steps to update your contract.

1. While in the Asset, go to the Contracts tab.

2. Select the lease contract and click Edit. If you are already in the contract, you may scroll to the bottom of the workspace and click Edit.

3. Once in Edit mode in the contract, click Edit in the Asset box.

   
   

4. In the pop-up, fill in any missing information. Required fields are bolded and must be populated to perform a Lease Accounting Readiness Review.

   
   

5. Once all fields are populated, click Save Changes.

6. Scroll to bottom of workspace and click Save Contract.

7. Add any relevant notes in the pop-up.

8. Click Okay.

Performing the Lease Accounting Readiness Review

This action is taken within the Real Estate Manager user interface, after a lease contract has been added to an existing asset. The contract must be entered using a Contract Category which has been configured as having lease accounting significance. This is done within Administration in the Contract Categories workspace. For more information on this configuration, please see the Real Estate Manager User Guide – Contract Categories, available in Ask Alex and the Success Center.

The Lease Accounting Readiness Review checks lease contracts for critical and required data that must be transferred to Lease Accounting Manager to provide accurate and detailed lease accounting, to ensure full accounting compliance. There are three steps to the review which include reviewing the details for contract payments, contract duration, and a final review.

Note: Leases must be in an Active state to commence with a Lease Accounting Readiness Review.

1. From the Top NavBar, select Management and then Assets. 

2. In the Action Panel, click the Expand Tree icon to display the Asset which the lease contract has been added.

3. Select the Asset. The Summary tab for the Asset displays.

   
   

4. Click on the Contracts tab.

5. Click the blue hyperlink on the lease contract.

   
   

6. The Contract Details display and you will see that the lease has been unsynchronized, as no Lease Accounting Readiness Review has been done.

7. From the Actions drop-down, select Mark Lease as Active.

8. Click Perform Action.

9. Click Okay in the confirmation pop-up.

10. Now that the lease contract is active, you may select Commence Lease Accounting Review from the Actions drop-down.

11. Click Perform Action.

    
    

12. In the Lease Accounting Review pop-up, you’ll start with the Contract Payments. Evaluate each of the contract reviews that are listed. These will only include reviews which result in a known increase in payment amount, which typically include fixed or stepped rental increases and any minimum escalation percentages such as a collar or floor attached to a review.

13. Verify the first payment date is correct and that all of the current contract costs and upcoming reviews, if any, are entered correctly.

14. Click Save and Continue if everything is correct and you are ready to proceed to step 2 of the review.

15. The next step is to review the contract duration, renewal options, and indicate the reasonably certain option.

    

16. Verify the Initial term and any options are correct, including the current status.

17. In the Un-Exercised Options section, select the Exercise Assumption appropriate for each option, ensuring that you indicate if any are reasonably certain to be exercised.

18. Enter any relevant notes associated with each option.

19. You may upload relevant document as necessary by click the Click to upload hyperlink for each option.

    
    

20. The third step in the review lists all of the contract details that will be included in the review.

    Note: Once a review is saved, it cannot be modified. An incorrect review may be deleted and reperformed as long as it has not been submitted for export to a lease accounting system. Once exported, the review is permanently frozen within the system.

21. You may enter necessary notes in the confirmation pop-up that will appear for the approver and they will also be recorded in the Lease Accounting Readiness journal.

    
    

22. Click Yes – Submit this Review.

23. The lease contract is now ready for approval for synchronization.

    
    

Approving the Lease Accounting Review

The next step in the lease synchronization process is for the Lease Accounting Review to be approved within Real Estate Manager. This approval is done by a different user than the one that submitted the review and serves as another quality check on data accuracy prior to the lease contract being sent to the accounting compliance application.

1. To approve a Lease Accounting Review, navigate to the Lease Accounting Synchronization Management workspace by clicking Management and selecting Lease Accounting Synchronization Management.

   
   

2. Once in the workspace, on the Lease Accounting Synchronization Wizard tab, you will see any previous synchronization activity listed and you may view details on those synchronizations by clicking View Details.

   
   

3. To start the process for a new synchronization, including approving the review, click the Next button in the Synchronization Process section.

4. Step 2 of the process identifies any contracts that have had changes made to them that require a Lease Accounting Readiness Review to be performed. Links to take that action appear in the table.

5. Click Next.

6. Step 3 of the process is where a user may review and approve a Lease Accounting Review. To do so, click the Review and Approve link in the Actions column.

   
   

7. In the pop-up, review and verify all information is accurate for the Contract Details, Contract Costs, and Options sections.

8. If everything is correct, click Approve.

9. If there are mistakes that need to be corrected, click Decline.

10. Once approved, you may view the review details by clicking the View Lease Accounting Review Details link in the Actions column.

11. Click Next.

12. If you view the contract within the Asset Management workspace, you’ll see the synchronization status change to Import for Lease Accounting – Approved by Real Estate.

    
    

Commencing with the Lease Accounting Synchronization

Once the review has been approved, it is now ready to commence with the lease accounting synchronization.

1. On step 4 of the Lease Accounting Synchronization Wizard, check the boxes for any contracts which you want to synchronize with the core accounting application.

   
   

2. Click Complete Synchronization Process.

3. Once complete, you’ll see a status box at the top of the workspace.

   

4. If you view the contract within the Asset Management workspace, you’ll see the synchronization status change to Import for Lease Accounting – Pending Accounting Approval.

   

5. Once a lease contract has gone through the synchronization process within Real Estate Manager, it must still be booked, classified, and approved in Lease Accounting Manager.