Testing the Transition Process and the Resulting Amortization Schedule and Journal Entries
As long as you do not upload or import the journal entries created into your accounting system, you can test the effects of applying the transition by applying and unlocking as many times as you like.
- Enter in any ASC 842 Adjustments required
- Change the Transition Date to the date that you are transitioning on (ie 1/1/2022)
- Click on the APPLY TRANSITION NET ADJUSTMENTS button
After the APPLY TRANSITION NET ADJUSTMENTS button has been selected, iLeasePro will "lock down" the application and all active leases will use the transition date that was entered as the commencement date. You will also see that the transition date is now read-only and the "Unlock" checkbox is displayed.
Click on the Unlock checkbox to remove the transition date lock. Note: This may take up to 60 seconds depending on the number of leases you have in the account, so please do not click anything until you see the page refreshed.
When the transition date has been locked using the method described above and you review the lease details, you will see in the Accounting tab that your selection choice for the "Select Year" will start in the year of the Transition Date. And the journal entires and amortization schedule will start on the transition date.
In the example below, we will use a lease with a Commencement Date of 1/1/2019.
Prior to applying the transition date, you will see that you can create journal entries and view the amortization schedule for all years in the lease term (shown below)
Journal Entries
Amortization Schedule
After the transition date has been entered and "applied", all the commencement date of all active leases will be replaced with the transition date that was "applied".
You will notice that the transition date is displayed on the Lease tab for the lease but is read-only. The original lease dates are not changed to keep the integrity of the lease data.
On the leases Accounting page, you will now only be able to create journal entries or the amortization schedule from the transition date.
Also note that in the month of the transition date, in this case, January 2022, the initial ROU Asset and Lease Liability journal entries are created.