When you access System Options, you land on the Selections tab.

In the Accounting methodology field, select the standard that you follow.

For compliance with the standards, the Number of separate years in future rent commitment report field defaults to 5.

If you wish to report a different number of years separately, increase this field to the appropriate number.

The Default depreciation method field defaults to Straight Line depreciation, which most companies use.

If you normally use a different method that EZLease supports, you may select it here and all new leases will automatically use that method.

Note: When you change this field, a pop-up appears asking if you want to change the depreciation method of all existing leases in the database to the new default method.

In the Accrual calculation period section, indicate whether depreciation is calculated monthly or daily.

Note: If monthly is selected, no depreciation is recognized on the 31st day of a month; all months are considered to have 30 days (in February, an extra two days of depreciation is applied on the 28th, or one extra day on the 29th in a leap year).

Use the Rent commitments by section to indicate how you define a “year,” either 12 months from the end date of the report or as the next fiscal year end.

Note: The Future Minimum Rent commitment reports show rent due for the next five years by year, then all remaining rent in the “Thereafter” group. (The number of years may differ if you made changes in Step 2.)

Next, indicate whether any of the following options apply by selecting the corresponding checkbox.

• 360 Day Year for Rent & Interest Accrual - This option is only available if the Accrual calculation period is Month.

  • If unchecked, accrued rent and interest are divided evenly over the number of days in the current calendar month.

  • If checked, accrued rent and interest expense are calculated using 30-day months (with no activity on the 31st day of a month), which makes the daily activity the same whether a month has 30 or 31 days.

  Note: Checking this option makes for more consistent recognition of rent accrual, including operating rent expense on non-leveled leases when leases are paid in the middle of the month, but your normal report period end date is the end of the month.

• Display executory cost types separately in future rent report - You may display up to five executory cost types and five non-lease component types. This option indicates whether the Future Minimum Rents report should show executory costs and non-lease components grouped together or by individual type. If unchecked, all executory cost types are combined.

• Report lease incentives separately from rent - For FAS 13 and IAS 17, checking this box will amortize lease incentive amounts separately from rent, with their own accounts for income and balance.If unchecked, the lease incentives are subtracted from the overall operating rent due over the life of the lease, reducing the level rent recognized each period. In ASC 842, IFRS 16, and GASB 87 reporting, lease incentives are automatically included in the Right-of-Use Asset and this option has no effect.

• Include future leases in future minimum rent commitments - If checked, a lease that has a booking date before the report end date and a begin date later than the report end date will be included in future minimum rent commitment reports. If unchecked, such leases are ignored; only leases active as of the report end date are included.

  Note: You must change the booking date on a lease before this selection will have any effect, as the booking date by default is the same as the lease’s begin date.

• Smooth rent leveling - If checked, “cash rent paid” includes a prorated portion of the rent payment if the report period begins or ends in the middle of a rent payment period.If unchecked, cash payments are counted in full on the day of the payment.

• Separate level rent from operating rent - Selecting this option will cause the Journal Entries report to show separate expense lines for the current cash and the level rent. The Income Statement/Balance Sheet Compact Report will also show the level rent as just the difference between cash and level rent.

• XML spreadsheet output - If checked, spreadsheet output is created using the .xml spreadsheet format. If unchecked, spreadsheet output from reports is in the form of Excel spreadsheets using the .xls or .xlsx format.

  Note: Output to .xls and .xlsx spreadsheets requires a licensed copy of Excel on your computer, whereas XML output does not require any other software on your computer.

• Open Excel to display spreadsheet output - If XML spreadsheet output is unchecked, you can check this box to have Excel open and display a spreadsheet as soon as it is created.

• Report depreciation after lease expiration - If checked, it allows reporting that tracks depreciation after lease expiration on leases with depreciation over the economic life (leases with ownership transfer or reasonably certain purchase option).

• Descending asset and liability balances in amort schedule - If checked, the Amortization Schedule - Finance Leases report shows the net asset (gross asset minus accumulated depreciation) and remaining obligation. If unchecked, it shows the accumulated depreciation and cumulative obligation paid.

• Automatically open most recently used database - If unchecked, EZLease does not open any database automatically. You must select a database using File>New, File>Open, or the most recently used databases list before you can enter leases or run reports. If checked, the most recently used database will open automatically. If the attempt to open the database fails, EZLease reverts to running without an open database until you select another.

  Note: This option is not applicable in the Lite edition because only one database is permitted, and it is always opened automatically.

• Descriptive fields in all spreadsheet output - This is intended for ease of sorting and selecting data in Excel. If checked, every spreadsheet report contains the description, Lessor name, asset class, financial group, and four user-defined fields at the end of each row (in many cases, the description is automatically part of the spreadsheet format and found at the beginning of the row; if that’s the case, it is not repeated at the end of the row).

Click the Account numbering button, and continue to step 8.

Follow the below steps, based on what action you need to perform:

Note: Note: The account number group “(blank)” is provided to facilitate clearing all account number fields. This group cannot be deleted or changed.

Enter the account numbers that match your ERP into each field on all three tabs (Lease, Variable, and ARO).

Note: Each account number may be up to 50 characters in length.

Do you have any specific account numbers that contain a combination of a fixed number and a lease-specific code (such as a division code or cost center), separated by a dash or some other special character?

If you want account numbers to appear on reports, check the Include account numbers on spreadsheets box at the bottom of the screen.

If left unchecked, account numbers chosen are still visible on the lease record but are not output (except on the Listing report).

In System Options, click the New Standard tab.

In the Implementation date field, enter your effective date for the new standard.

In the Application date field (also known as the Transition date), enter your transition date to the new standard (for ASC 842 and GASB 87 only).

ASC 842: If following FASB ASU 2018-11, the comparative period date should be the same as the implementation date.

GASB 87: Requires the change to the new standard to be applied retroactively to prior periods presented “if practicable.” Specify the beginning of the prior periods presented as the application date. If restatement is not done, this date should be the same as the effective date above.

For the Default standard to use, indicate whether by default to use the old lease accounting standard (FAS 13 or IAS 17, depending on whether you chose U.S. GAAP/GASB or IFRS accounting methodology) or the new lease accounting standard (ASC 842, IFRS 16, or GASB 87).

This affects which classification you see when a lease is displayed, and which methodology is chosen by default when you create a report. (You may select the alternative choice once the lease or report setup window is displayed.)

Are you following ASC 842?

In System Options, click the Text Tab tab.

In the Maximum interest rate field, indicate the rate at which EZLease should display a warning message if a rate higher than this number is entered for the incremental borrowing rate, implicit rate, or a user-classified discount rate.

Note: You may still enter whatever rate you wish, but this reduces the potential for inadvertent errors.

Enter the number of fields you wish to display on reports and screens within EZLease for the following:

• Number of user-defined fields to display (up to 20)

• Number of executory cost types to display (up to 5)

• Number of non-lease component types to display (up to 5)

  Note: If you choose zero for the executory cost types or non-lease component types fields, the “Display” boxes on the New Standard tab will be automatically unchecked.

If you want to change the text labels for any of the above-mentioned fields, type your text labels in the fields provided. The changes will then appear on reports and EZlease screens.

Example: To change “User-defined field #1” to “Division”, you would type Division in the text box next to that label.

If desired, you may also change the text labels for the User-defined date or Variable pmts fields.

EZLease is registered to your company and the company name appears on all reports. Since company names can change, you may enter a different name in the Displayed company name field.

Important: Giving EZLease to another company while continuing to use it yourself is a violation of copyright law.

In System Options, click the Notice Dates tab .

If you want the Notice Dates report to include all current notices each time a database is opened, check the box next to Check dates each time EZLease opens a database.

If you want the Notice Dates report to include notification that the rent is scheduled to change, check the box next to Notify of rent changes.

Use the accompanying fields to specify how far in advance and how long after the scheduled change the notice is displayed.

If you want the Notice Dates report to include notification that a lease is scheduled to expire, check the box next to Notify of Expirations.

Use the accompanying fields to specify how far in advance and how long after the expiration date the notice is displayed.

Note: If a lease is terminated early, no notice is generated.

If you want the report to include notification that an ARO is going to end, check the box next to Notify of ARO ends.

Use the accompanying fields to specify how far in advance and how long after the ARO end date the notice is displayed.

In System Options, click the Fiscal Datestab.

Select the appropriate fiscal option (if not already selected). If you need additional information, click on the option, and then press F1.

If none of the options properly describe your actual calendar, please contact EZLease so we can understand your situation and potentially adjust the software accordingly.

Note: When changing from the default option to another, you may receive an “accrual calculation changed” message. Click OK.

If you changed the fiscal option, be sure to adjust any accompanying fields for the option selected.

Verify the Preferred report dates selection is correct; change if necessary.

In the Valid choices for section, place your cursor in the blank field and enter the first option in the list.

If changing existing values, simply double click the value and modify the text.

In System Options, select the ARO tab.

In the Accretion compounding section, indicate whether your AROs are compounded on a Daily basis or Monthly.

Note: The best choice is usually dependent on your fiscal calendar. Week-based fiscal calendars should use Daily, while a period that ends the same day of the month each month should use Monthly.

In the ARO rates shown section, indicate whether the inflation rate and the credit-adjusted risk-free rate are shown as Pre-compounding or Post-compounding.

For AROs with a begin date that is not the first day of the month, you can use the Start calculating ARO expense section to indicate whether to start calculating ARO expenses (ARO accretion and ARC depreciation) on the first day of that month, or on the begin date.

If you enter the options on a lease, you can have EZLease test AROs to see if their cost is high enough to impose an economic penalty that compels renewal of the lease for some or all of the options.

To turn this on, select the Check ARO for economic penalty compelling lease renewal box.

Note: The test applies only to AROs that are attached to actual capital or operating leases. If an ARO is attached to an ARO-only record, the end date of the base record is automatically extended to cover the entire useful life of an attached ARO.

If you wish to require recognizing options that cover a specific percentage of the useful life of an ARO’s associated asset (or at least the number of months specified, whichever is less), enter the percentage in the Cover at least % of useful life field or the number of months in the or cover at least months field.

If you want EZLease to skip minimal AROs that have a current cost less than a specified amount, enter the amount in the Skip test if less than field.

Note: If the percentage or months are zero, that test is skipped and only this test applies.

Next, indicate if you want to Continue to accrete ARO after scheduled end date using inflation rate.

If checked, ARO accretion continues, using the ARO’s inflation rate as the interest rate to calculate accretion. The asset side remains at zero after the scheduled end date either way (unless you change the end date).

If unchecked, the ARO liability does not change after the ARO end date is reached, though it remains on the books until the ARO is explicitly terminated.

If you only want to recognize inflation-based ARO accretion after the ARO end date until a specific date, enter the date in the Stop after-end-date accretion effective field.

If you need to enter credit-adjusted risk-free rates to be used for accreting the ARO, you will use the Accretion rates table.

To enable this option, IFRS users should check the Recalculate accretion when rate changes (IFRS) box. Other users should leave the box unchecked.

In the table, enter the rate in the Accr Rate field and also the Effective Date.

Note: If you need to delete a rate change, change the rate to 0 and EZLease will confirm that the change should be deleted. You may also create a spreadsheet with the contents of this table by holding the Ctrl key and clicking on the checkbox.

If you have different accretion rates for different divisions of your company (most commonly used for countries), check the Group specific rates using box.

Result: A new column titled Group appears in the table.