Additional balances and costs

Use Additional balances in the accounting lease wizard for amounts that adjust the starting right-of-use (ROU) asset. Use the Additional Costs tab for costs that need their own depreciation schedule and version history. Before entering an amount, identify whether it is already included in a payment schedule, a transition balance, or another additional cost. Record it once so you do not count the same amount twice.

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Additional balances in the wizard

On Expenses, Abatements and Allowances, select Edit beside Additional balances. Enter amounts in the accounting lease’s currency, then select Save and Continue. The table below describes positive inputs for a lessee lease. Dr means debit and Cr means credit. Account names are Spacebase categories; your chart of accounts supplies the exported account numbers. The entries describe the balance’s contribution to recognition, rather than the full combined journal entry. Spacebase combines these fields as follows:

• Prepaid lease payments = Prepaid rent + Construction costs − Accrued rent.
• Initial direct costs total = Initial direct costs + Make good costs.
• Before other transition, impairment, and modification adjustments, net ROU asset = Lease liability + Prepaid lease payments + Initial direct costs total − TI allowances received before the effective date.

These balances generally adjust the asset rather than the unpaid lease payments used to calculate the lease liability. A short-term lease uses a different recognition treatment.

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Example: prepaid rent and an incentive

Suppose the lease liability is $100,000, prepaid rent is $5,000, qualifying initial direct costs are $2,000, and a pre-commencement incentive is $3,000. With no other adjustments, net ROU is $104,000. The recognition entry debits ROU $104,000 and Lease incentives $3,000, and credits Lease liability $100,000, Prepaid rent $5,000, and Initial direct costs $2,000. This example assumes the prepayments and incentive were already recorded in their respective accounts.

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Additional Costs with separate schedules

Open the accounting lease’s Additional Costs tab and select Create Additional Cost. Choose a description, Cost type, and Payment timing. Then enter the version’s effective date, GL start date, depreciation start, end date, and amount. An In Arrears cost also requires a discount rate. The cost type labels the record. Payment timing, dates, amount, and discount rate determine the schedule. Selecting a label does not establish that a cost qualifies for capitalization. In particular, do not put an ordinary refundable deposit on a depreciating schedule solely because Deposit is available.

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In advance

For a new positive cost paid in advance, Spacebase debits Initial direct costs and credits Cash for the entered amount. It depreciates the asset from the depreciation start date to the end date: Dr Depreciation expense, Cr Accumulated depreciation. For $12,000 depreciated over 24 full months, monthly depreciation is $500. Partial months are prorated. Separate depreciation dates let you distinguish when the cost is recognized from when depreciation begins.

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In arrears

For a new cost payable at the end of its schedule, Spacebase discounts the amount using the annual discount rate divided by 12. For full monthly periods: Present value = Future payment ÷ (1 + annual discount rate ÷ 12) raised to the number of months Initial recognition debits Initial direct costs and credits Accounts payable for the present value. Each month, Spacebase:

• Debits Interest expense and credits Accounts payable for the discount unwind.
• Debits Depreciation expense and credits Accumulated depreciation for depreciation of the asset.

The depreciation calculation divides the remaining net asset by the remaining depreciation periods, with partial-period proration. The interest calculation also accounts for partial periods. Use the generated schedule for the exact amounts. For a $12,000 payment after 24 full months at 6% annually, the initial present value is approximately $10,646.23. First-month interest is approximately $53.23, and monthly depreciation is approximately $443.59, before rounding adjustments. Use Add Expiration to generate closing entries when the cost is ready to close. For an arrears cost, the closing payment debits Accounts payable and credits Cash. The asset and accumulated depreciation are also cleared. Reconcile the generated payment with your AP process.

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Restoration obligations and later changes

A restoration obligation can involve both a capitalized amount and a provision. The wizard’s Make good costs field only contributes to ROU. A separate Dilapidation Provision cost with In Arrears timing provides a discounted payable and its unwind. Choose the treatment required by your accounting policy, and avoid entering the same capitalized amount in both places. Additional costs have their own versions. Use a modification for a new event, an impairment for a write-down, or Correct an error for incorrect historical inputs. Review the resulting entries and depreciation after the change. Closing the main accounting lease does not replace checking that its additional costs have also been closed.