Skip to main content
Use accounting lease modifications to record events that change an approved accounting lease after commencement. Each modification adds a new snapshot to the lease timeline. Earlier snapshots are preserved, so the original recognition and every later remeasurement stay auditable while the amortization schedule and journal entries update from the effective date forward.

​
Before you begin

Identify the accounting event first, then choose the workflow. ASC 842 distinguishes between:
  • A lease modification — a change to the terms and conditions of the contract that changes the scope of or consideration for the lease (ASC 842-10-25-8), such as an amendment, expansion, extension, or reduction in space.
  • A remeasurement that is not a modification — the contract is unchanged, but an event under ASC 842-10-35-1 or ASC 842-20-35-4 requires you to remeasure the lease liability, such as exercising a renewal option that was not previously reasonably certain.
  • A change in the right-of-use (ROU) asset only — the lease liability is unchanged, but the asset is impaired or abandoned under ASC 360-10.
  • An error in a prior snapshot — the original inputs were wrong, which is a correction under ASC 250 rather than a new event.
For each event, confirm the effective date, the date the change should first appear in the general ledger, and the revised payments, lease term, and discount rate. Update the lease-administration record first so the accounting wizard pre-fills the current payment obligations. The modification types offered depend on the classification of the lease, its asset class, earlier snapshots, and your company’s settings. Each type’s page notes when it is not available.

​
Create a modification

1

Open the modification menu

Open the accounting lease and select Lease Actions > Create Modification.
2

Select the modification type

Select the modification type that matches the event and click Create Modification.
3

Complete the wizard or form

Update existing accounting lease and Partially terminate accounting lease open the full accounting wizard: snapshot settings, payment obligations and balances, classification, and summary. The other types open a short form for the specific event. Add lease expiration adds closing entries directly, and Flow through real estate changes opens the changelog for review.
4

Review the results

Check the new snapshot on the Lease Timeline, the amortization schedule, and the journal entries. Confirm the effective date, the remeasured lease liability and ROU asset, and any gain or loss, impairment, or catch-up entries.
5

Submit for approval

Resolve any lease-administration changes you have addressed, then submit the accounting lease for review and approval through Lease Actions. Only approved accounting leases flow into reports and automated journal entries. See Accounting Leases.

​
Modification types