NetSuite Fixed Asset Leasing 101

Table of contents

Preface

1. Relevant contents of the new lease standards

1.1 Main changes

1.2 Differences and connections between IFRS 16/ASC 842/CAS 21

1.3 The significance of the implementation of the new lease standards

2. Rental function in NetSuite

2.1 Overview

2.2 Settings

2.2.1 Related account settings

2.2.2 Asset type settings

2.3 Detailed description of functions

2.3.1 Case 1

2.3.2 Case 2

3. Extension of application of new lease standards

Preface

The new leasing standards have been widely used in all companies that implement corporate accounting standards, but we found that most NetSuite users have not enabled the "fixed asset leasing function". Therefore, we hope that the research and sharing of this topic can spark ideas and help NetSuite consultants. And corporate financial personnel can better understand and use the corresponding functions of NetSuite to effectively solve accounting processing and other problems faced in practice.

Author of this article:

Wang Ningde Information Financial Consultant

Min Hao Yue Dezhijiang Information Assistant Consultant

1. Relevant contents of the new lease standards

1.1Main changes

The main changes in the new lease standards are as follows:

First, the lessee will no longer distinguish between finance leases and operating leases, and will recognize right-of-use assets and lease liabilities for all leases with actual use control rights , and at the same time make depreciation and interest expense provisions for leased assets;

Second, the lessee's accounting model is converted from the dual lease accounting model under the original standards to a single lease accounting model , and all leases are included in the balance sheet . The details are shown in the figure below:

1.2 Differences and connections between IFRS 16/ASC 842/CAS 21

The differences between the three standards of IFRS 16/ASC 842/CAS 21 are shown in the figure below:

The main common points of the three standards IFRS 16/ASC 842/CAS 21 are:

All involve lease accounting, and all lease contracts need to be recognized as lease assets and liabilities and listed on the balance sheet;
Both depreciation and interest expenses need to be accrued for lease assets and lease liabilities respectively, and listed on the income statement.

1.3 The significance of the implementation of the new lease standards

Improve the quality of accounting information to better meet the needs of report users

Under the new lease standards, the lessee's accounting model is a single lease accounting model, and all leases are included in the balance sheet. Therefore, it is conducive to fully reflecting the rights and related obligations of the company due to leasing transactions, and improving the transparency and comparability of the statements.

Truely reflect the company's assets and liabilities and prevent risks

Under the new lease standards, assets and payment obligations originally acquired through operating leases need to be listed on the balance sheet, which eliminates the opportunity for lessees to use operating leases for off-balance sheet financing and can more fully and truly reflect the company's assets and liabilities. , which helps enterprises prevent risks in advance.

2. Rental function in NetSuite

2.1 Overview

The leasing functionality in NetSuite currently exists in a separate fixed assets module to comply with relevant leasing guidelines. In the following instructions, we will also handle transactions from the tenant 's perspective. The overall process is shown in the figure below:

In addition, regarding the recording of lease interest and amortization in the last two steps of the process, users can change it according to their actual situation, or they can record amortization first and then record lease interest.

2.2 Settings

2.2.1 Related account settings

Path: List-Accounting-Account-New

According to the requirements of accounting standards, all leases need to be recognized as right-of-use assets and lease liabilities. At the same time, the apportionment of lease expenses also involves the provision of depreciation and interest expenses, so relevant accounts need to be maintained, as explained below:

serial number	Subject name	illustrate
01	right-of-use assets	Account used to track right-of-use assets, of fixed asset/other current asset type
02	Accumulated depreciation – right-of-use assets	Account used to track accumulated depreciation-right-of-use assets, of type Fixed Asset
03	Lease liability	Account used to track lease liabilities, of type Accounts Payable/Other Current Liabilities/Long-Term Liabilities
04	Interest expense	Account used to track lease interest, of type Expense/Other Expense

It should be noted that when creating a right-of-use asset account, you need to maintain the "asset account" in the Fixed Assets Management parameters of the account interface. Otherwise, when creating an asset type and selecting an asset account, the created "right-of-use asset" account, depreciation, and Accounts such as depreciation expenses also need to be set. As shown below:

2.2.2 Asset type settings

Path: Fixed Assets-Settings-Asset Type-New

Since you need to select an asset type when proposing or generating assets, you need to maintain this information first. This operation is similar to the type setting of fixed assets. Relevant subjects and descriptions are as follows:

serial number	Subject name	illustrate
01	Asset account	Asset cost account (balance sheet). When new assets are proposed, this account is searched for new transactions.
02	Depreciation account	Account (balance sheet) that tracks accumulated depreciation.
03	Depreciation expense account	The expense account for depreciation expense (depreciation amount during the period).
04	Offsetting account	Asset write-off expense account.
05	Write-down account	Asset write-down expense account.
06	Disposal cost account	Asset disposal (sales) expense account.

If US accounting standards ASC 842 is implemented, operating leases and finance leases need to be distinguished. Under the nature of operating leases, the "operating lease" parameter needs to be checked on the current page, and the corresponding depreciation expense account is lease expense;

If IFRS 16 is implemented, there is no need to distinguish between operating leases and finance leases. All accounting treatments for finance leases will be followed. There is no need to check the "operating leases" parameter on the current page, and the corresponding depreciation expense account needs to be set to Depreciation expense.

2.3 Detailed description of functions

2.3.1 Case 1

Company A (lessee) and Company B (lessor) signed a lease contract. The main content is that Company A leases a piece of manufacturing equipment from Company B. April 17, 2023 is the lease start date. The lease type is finance lease. The lease term is 24 months, and Company B will pay USD 500 at the end of each month. The two parties agree that the annual interest rate is 5%.

Create rental records and maintain rental information

Path: fixed assets-lease-lease-new construction

After filling in the page information and maintaining the posting reference label account, save it. The current status of the page will be displayed as " Pending Lease Payments" , indicating that payment is waiting to be generated.

Page related fields and descriptions:

serial number	Field Name	illustrate
01	date	Lease transaction creation date
02	leasing company	The lessor’s company name is Company B according to the contract
03	Lease contract number	Enter the number for entering into the lease contract, or you do not need to enter this information, for example, FAL00006
04	Asset description	The name of the leased asset, such as manufacturing equipment 003
05	Rent payment frequency	Monthly or yearly, new versions may be added quarterly or semi-annually, choose monthly according to contract
06	term of lease	Expected lease period, fill in 24 according to the contract
07	annual interest rate	The interest rate implicit in this asset financing is 5% according to the contract.
08	Lease start date	Lease start date, selected per contract 04/17/2023
09	Lease end date	The system automatically calculates the lease end date without manual selection.
10	Subsidiaries	The company name of the lessee is Company A according to the contract
11	Department/Location/Category	Corresponding department/location/category, fill in according to needs, or not fill in, such as manufacturing department, etc.
12	finance lease	When this parameter is checked, it is a financial lease. If it is not checked, it is an operating lease. Check the financial lease according to the contract.

Here are a few things to note:

1. The accounts in the posting reference tab at the bottom of the page need to be maintained first (2.2.1) and selected in the editing state of the leasing page;

2. After the current page is saved for the first time , all Lease Summary information is displayed as 0, and there is no record under the Lease Amortization Table page.

3. Regarding the relationship between rent payment frequency and lease term, please refer to the following table:

Rent payment frequency	term of lease	Lease period calculation
moon	2	2 months
quarter	2	6 months
half a year	2	1 year
Year	2	2 years

Generate payments, generate amortization schedule

Open the current lease record again and enter the "Edit" state. Enter the start date and amount under the lease amortization table page . The start date is the first lease payment date, and the amount is the theoretical amount that should be paid in each period. According to the case contract, we can Set the start date to the end of the month for the first payment on April 30, 2023, and the amount to 500.

After filling in, you can click "Generate Payment", and the interface will pop up with a confirmation message. After clicking "OK", the amortization schedule will be generated under the lease amortization table tab.

The current page is still in the "Edit" state. After clicking "Save", the page will refresh the Lease Summary and Lease Amortization Table information, and the page status will also change to "Pending Lease Journal Creation" , indicating that the lease journal is waiting to be created.

If you need to generate amortization plans in batches, you need to use the system's "Batch Generate Amortization Plans" function, and the path is Fixed Assets - Lease - Generate Lease Plan.

Create a lease journal

Directly click the "Create Lease Journal" button on the current page, and a confirmation message will pop up. After clicking "OK", the system will automatically generate a journal for the current lease. The status of the leasing interface also changes to "Journal Created" , indicating that the leasing journal has been created.

Afterwards, under the "Transaction Processing" field on the lease record interface, you can view the automatically generated lease journal.

We can see that the lease journal records increase the right-of-use asset and also increase the lease liability:

The general ledger implications of creating a lease journal are as follows:

Subject	debit	lender
right-of-use assets	11396.94
Lease liability		11396.94

Create assets

Path: Fixed Assets-Transaction Processing-Asset Creation

After completing the creation of the lease journal, we need to generate the corresponding assets in the system. By selecting/entering the start date and end date, selecting the corresponding company and asset type, and clicking "Create Asset", the system will automatically jump to the backend interface.

You can refresh the current interface to view the processing status.

After this step is completed, the newly generated asset will be added to the asset list. The corresponding record can be found in "Fixed Assets - List - Assets", and the asset status is brand new.

Its leasing information will also be automatically brought out under the "Leasing" tab on the asset page.

Returning to the rental record, we can see links to asset proposals and asset information. At this time, the page displays "Asset Created" , indicating that the asset has been created.

当然，我们也可以先进行资产提议，确认提议信息无误后，然后通过管理资产提议生成资产卡片。当资产提议后，租赁记录的状态会更改为“Asset Proposed“，表示资产已提议，但是还未创建，生成后则为“Asset Created“。

创建供应商账单

路径：事务处理-应付账款-输入账单

当资产创建完成后，我们需要创建对应的账单。按照合同，我们第一笔应付账款的产生应该在2023年4月末，金额为500。

供应商账单的总账影响如下所示：

创建供应商账单的总账影响如下所示：

科目	借方	贷方
租赁负债	500
应付账款		500

记录租赁利息

路径：固定资产-租赁-记录租赁利息

只有完成资产创建后才可以进入该步骤，我们可在当前界面选择记录利息的日期（根据案例背景为2023年4月30日）和对应子公司后，点击“记录利息”，系统将自动跳转至后台界面。

可刷新当前界面查看处理状态。

该步骤完成后系统将自动生成租赁利息的日记账，回到租赁交易的租赁摊销表标签，可以看到对应日记账的相关链接。如果第一次租赁付款日期在当月15日或之前，则无利息。

租赁利息日记账如下：

记录租赁利息（融资租赁）的总账影响如下所示：

科目	借方	贷方
利息费用	47.49
租赁负债		47.49

如果案例背景为经营租赁，则需要执行美国会计准则ASC 842，不单独区分利息费用，则在记录租赁利息时会产生不同科目的总账影响：

记录租赁利息（经营租赁）的总账影响如下所示：

科目	借方	贷方
累计折旧-使用权资产	36.12
租赁负债		36.12

记录摊销

路径：固定资产-事务处理-资产折旧

我们通过选择资产类型，子公司以及折旧期间（根据案例背景为2023年4月30日）后，点击“折旧资产”，系统将自动跳转至后台界面。

可刷新当前界面查看处理状态。

折旧完成后，在资产页面折旧历史记录下可以找到对应生成的折旧记录及日记账链接。

2023年4月末折旧日记账总账影响如下：

折旧日记账（融资租赁）的总账影响如下：

科目	借方	贷方
摊销费用	474.87
累计折旧-使用权资产		474.87

如果案例背景为经营租赁，则需要执行美国会计准则ASC 842，不单独区分利息费用，而是将利息费用包含在租赁费用中，在记录折旧时会产生不同科目的总账影响：

折旧日记账（经营租赁）的总账影响如下：

科目	借方	贷方
租赁费用	479.17
累计折旧-使用权资产		479.17

查看资产负债表与利润表

资产负债表详细信息如下：

利润表详细信息如下：

最后的呈现不管是经营租赁还是融资租赁，相应科目在资产负债表和利润表均有所体现。资产负债表主要体现使用权资产（包含累计折旧），租赁负债等信息，利润表主要体现利息费用。

2.3.2 案例二

甲公司（承租方）与乙公司（出租方）签订一租赁合同，其主要内容有甲公司从乙公司租赁1台制造设备，2023年4月16日作为租赁开始日期，租赁类型为经营租赁，租期为23个月，每月末向乙公司支付500美元，双方约定年利率为5%。已知该设备已经在2023年4月完成第一笔折旧与记录利息，现需要修改租赁合同，将年利率调升为6%，租期调整为24个月，每月支付金额不变，新合同生效日期为2023年5月15日。在系统中将如何修改租赁合同？

目前租赁记录如下：

2023年4月16日记录利息如下：

2023年4月末计提折旧如下：

具体操作如下：

修改租赁合同内容

我们需要返回原始租赁记录界面，点击“修改租赁记录”按钮；

此时界面弹出信息后点击“确定”，界面将会被刷新；

在租赁修改界面，我们按照新的租赁合同修改生效日期、年利率与租赁期限后（修改后的租赁结束日期将自动更改），确认无误，然后点击“处理”按钮；

此时该界面将显示状态为“Pending Process”，表示正在处理修改；

不断刷新界面后，租赁记录将变为“Pending Lease Payments”状态，表示等待租赁付款；同时我们可以看到，租赁期限、年利率等信息都发生了变动，尤其需要注意的是原始的租赁日记账的链接将会在“事务处理”下消失；

Lease Summary与租赁摊销表中的信息也将更新，只保留历史发生的第一期数据；

另外，我们可以发现在下方新增加了“租赁修改”的子标签，其中211为历史租赁合同信息，212为新租赁合同，原始日记账的链接在历史合同中，均可点击查看详情；

211为历史租赁合同：

212为新租赁合同：

生成付款，生成摊销计划

此时，进入租赁记录的“编辑”状态，按照案例一的步骤在租赁摊销输入开始日期与金额后，点击“生成付款”，保存后系统将重新生成新的摊销计划，同时也会刷新Lease Summary的信息。

应用租赁修改

更新后的界面状态将会变为“Pending Lease Journal Creation”，表示等待创建租赁日记账；同时也将出现“应用租赁修改”按钮；

点击该按钮后界面将跳转，可刷新查看处理状态；

完成后租赁记录状态将变为“Asset Created”，表示资产已创建，系统已自动刷新对应资产的卡片信息；此时“事务处理”下也将出现新创建的日记账链接；

该笔日记账为资产减值所产生的资产原始成本与当前成本的差异，可参考备注信息；

总账影响如下：

科目	借方	贷方
使用权资产	304.08
租赁负债		304.08

在租赁修改标签下，日记账链接也将在新租赁合同212同步；

可以看到对应的Lease Summary与详细的租赁摊销等信息，在租赁记录界面也可以看到对应信息；

到此，租赁合同修改的内容已完成，后续按照案例一的步骤进行记录利息与摊销即可，查看财务报表。

补充一点，如果是在还没有创建资产卡片的时候想要修改租赁合同，那就需要先冲销日记账然后直接修改租赁合同的内容。但是一旦当我们创建了资产卡片之后需要修改合同，日记账就无法直接冲销了，只能按照案例二中提到的方式修改租赁合同。所以也为了避免出错，也可以先“资产提议”，检查无误后再生成资产卡片。

另外，我们可以运行固定资产模块标准的报表查看租赁相关信息，比如每月折旧报告，固定资产清单等，也可以利用系统提供的搜索，比如租赁负债详细信息，使用权资产清单，短期/长期租赁负债等搜索，或者自己根据需要创建已保存的搜索。

3.新租赁准则的应用延伸

作为顾问，我们需要将更多的注意点放在现行准则下，我们应如何利用NetSuite的租赁功能。目前我们能想到的问题有以下两点：

1.现行准则下，我国将不再区分经营租赁与融资租赁，而是全部归为融资租赁，在NetSuite中的处理是否会受到影响？

不会受到影响。

现行准则下，企业需要对拥有实际使用控制权的所有租赁都要确认使用权资产与租赁负债，这一点结合NetSuite, 在创建租赁记录时我们已经定义了使用权资产和租赁负债的科目。另外，承租人的租赁费用，包括按未来租赁付款现值计提的折旧与按租赁余额计算的利息费用，这一部分将在折旧历史记录与租赁摊销表中体现。

因此，需要注意的是在创建资产类型时无需勾选“经营租赁”这一参数，而在创建租赁记录时勾选“融资租赁”即可，在相关科目按照系统要求维护好的前提下我们最终可以在资产负债表和利润表中可以看到相关信息。

2.租赁中止/届满场景下应如何处理？

目前NetSuite在租赁中没有相关功能，希望以后版本中可作为增强点。在此，有两个业务场景供大家参考：

Case1:租期未满，需要提前中止租赁的场景处理：

最佳实践分为两个步骤，具体处理如下：

1.通过“修改租赁合同功能”将原租赁合同租期缩短；