The following are examples of how you can the Lease BP to manage leases.
You execute a lease on December 1, 2003 with a commencement date of April 1, 2004 and a termination date of March 28, 2005.
Payment Term 1: A term of $4,000 per month for rent begins on April 1, 2004 and ends on March 28, 2005. The due day is 1.
Payment Term 2: A term of $300 per month for common area maintenance (CAM) starts on April 1, 2004 and ends on March 28, 2005. The due day is 1.
Payment Term 3: A semi-annual term of $500 for taxes begins on September 1, 2004 and ends on March 28, 2005. The due day is 1.
For accounting purposes, the rent for a building is to be charged back to departments, based on each department’s space usage. The Marketing Department uses 60% of the space and IT uses 40% of the space. If the total rent for the building is $5000 per month, then Marketing would be charged $3000 and IT would be charged $2000 per month.
The lease term start date is February 15, 2002, the end date is January 1, 2003. The frequency is semi-annual, and the amount is $1,000 per term. The Proration Rule accounts for the date difference in days, with the end date included.
The lease term start date is January 1, 2003, the end date is June 30, 2003. The frequency is monthly, and the amount is $6,000 per month. The due day is 1. The pre-payments are the first and last month’s rent.
The lease begins mid-month on 15 January, 2002 and ends mid-month on 14 January, 2003.
| • | Rent for the first quarter is $100 |
| • | Rent for the second quarter is $200 |
| • | Rent for the third quarter is $300 |
| • | Rent for the fourth quarter is $400 |
| • | Rent for the fifth quarter is $500 |
The rent abatement of $10 is given only in the first month. The rent is scheduled to be paid in full at the beginning of each month.
Straight-line Payment Adjustments. Straight-line payments can be modified if the business process design includes special data elements (fields). These fields can override the start and end dates of a lease, add or subtract days from the lease term, or add or subtract specific dollar amounts to the lease amount.
These adjustment fields do not change the line item dates or amounts. Unifier takes these adjustments into consideration when it calculates the straight-line payments after you click Save or Finish Editing.
When you open the form in view mode, you will see the adjustments reflected on the Payment Schedule you open from the Payment Schedule button on the toolbar.
The terms are a 12-month lease, with the first month rent-free. The rent is $1000 per month. Real estate rules (FASB 13) require that this rent be normalized (or straight-lined) across the entire lease term.
The base, or primary, lease term is 20 years. During the base lease term, the monthly lease payment is $10,000 for the first 10 years and $12,000 for the next 10 years.
Note: Payment Schedule calculations for Lease base frequencies and Escalation frequencies will differ slightly depending on the frequency used. For example, a 10 year lease escalating each year will differ slightly from a lease escalating every 52 weeks (as opposed to a lease escalating every 365 days). Over a 10 year period, if the lease calculation is done in days, there can be years with more than 365 days. Also, if the calculation done in weeks, 52 weeks might be a day or two short of a full year depending on the year used.
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