How to reverse activation of lease agreement

Scenario:

Lease has been already active for four months, but the manager finds out that lease was activated with incorrect lease term, which means liability and RoU estimations are incorrect as well.

This is because the correction will have affect to GL records, thus the GL Outputs which were generated for the previous periods will have different figures after corrections. Corrections in the local accounting system can be done by:

• Reversing old GL Outputs in the local accounting system, then upload the new GL Output files;
  OR
• Recording the amount differences for several GL accounts for the corresponding periods.

1. The sample summary of GL records after four months since the lease was commenced:
   
2. Reversal of monthly entries can be done from Role Center Setup -> Admin -> Reverse G/L Postings
   

It has same interface as Monthly posting so we enter information as is. From date – first date of month. To Date – Last date of month. Here it is important to provide filter for lease we want to reverse. Otherwise it would reverse specified period (months) for all of the leases.

This report reversal all entries with same date. If General Ledger Setup has closed those periods it can use Posting Date Overwrite that can be toggled in Lease Setup.
This report reverses all entries for specified period and unchecks flags “Posted to G/L” in all schedules.
If we reverse until beginning of the lease it will also put lease to status “In deliberation”.
3. After reversing all GL of the lease, it should not have any balances in the accounts. All of the GL accounts must have zeroes:

4. The lease is now enabled for corrections. In SOFT4Lessee go to “New Leases” and open lease card, which you need to correct. Proceed with data adjustment, for example, fix payment amount, term, payment due options, etc.
5. Once lease parameters are corrected, hit “Recalculate”, most fields do automatic recalculation
6. Sign the lease. The system will lock lease modifications.
7. Activate the lease. The system will post lease liability and RoU asset at commencement date.
8. Run function “Post to G/L” for all old periods. In this case for previous four months. The system will recognize monthly lease records.
9. Now the “Posted to G/L” ticks in the payment schedule, liability schedule and RoU asset schedule should be marked automatically for these four months:
   

10. The GL is also corrected in SOFT4Lessee. The GL summary after four lease months:
    

11. Proceed to GL correction in the local accounting system. The correction has affected to GL records of the previous four months. The GL Outputs of those four months are different now. Corrections in the local accounting system can be done by:

• Reversing old GL Outputs in the local accounting system, then upload the new GL Output files;
  OR
• Recording the amount differences for several GL accounts for the corresponding periods.