Crunchafi

Understanding the Amortization Schedule for GASB Lessee

The amortization schedule for GASB lessee details monthly lease accounting by tracking periods, calculating amortization expense by dividing total lease payments over the asset life, updating lease asset balances and accumulated amortization to determine net book value, and managing lease liability through present value calculations of lease payments, monthly interest expense based on discount rates, interest payable adjustments, and beginning-of-month liability payments.

Date & Month

The first two columns show the period for which the lease activity is recorded by Date in (YYYY-MM) format, and the Month count.

Amortization Expense & Lease Asset
  • Amortization Expense (Column C):
    • Calculated by dividing the Total Lease Payments by the Asset Life/Term.
  • Lease Asset Beginning (Cost) (Column D):
    • Initial measurement of the Lease Liability and any Initial Direct Cost minus any Incentives Received.
  • Lease Asset EOM (Column E):
    • Total updated Lease Asset balance after monthly amortization.
  • Accumulated Amortization (Column F):
    • Reflects the opposite sign of Amortization Expense (Column C).
  • Accumulated Depreciation EOM (Column G):
    • Shows the aggregate total of (Column F) as of the current month.
  • NBV (Lease Asset Accumulated Amortization) Balance (Column H):
    • Shows the total Net Book Value at the end of each month.
    • Calculated by taking the total Lease Asset minus Accumulated Amortization.
Interest Expense & Lease Liability
  • LT Liability Beginning (Column I):
    • Present Value (PV) of lease payments: payments are discounted back to the start date.
    • Payments from the 1st–15th of the month are excluded from PV calculations for base leases but included in ROU Asset.
    • Transition leases include all payments in liability calculations but exclude pre-start date payments.
  • Interest Expense (Column J):
    • Monthly interest is calculated as: (Discount rate/12) × Previous EOM Liability Balance.
  • Interest Payable (Column K):
    • Interest payable reflects the opposite of Column J less Interest paid as Cash. Followed by the pending difference caused by the cash payment to the calculated Interest Expense.
  • Interest Payable EOM (Column L):
    • Shows the remaining Interest balance as of EOM.
  • LT Liability (Payment at BOM) (Column M):
    • Monthly payments processed at the beginning of the month (1st - 15th) that were included in the calculation of the lease liability.
  • LT Liability (Payment at EOM) (Column N):
    • Monthly payments processed at the end of the month (16th - EoM) that were included in the calculation of the lease liability.
  • Total ST & LT Liability (Column O):
    • The total remaining Lease Liability at the end of the month.
  • LT Liability (Column P):
    • Provides detailed breakdowns of liabilities due beyond 12 months.
    • Calculated by taking Total ST Lease Liability for the month minus PV of payment of Interest plus Payment amount due within 12 months.
  • ST Liability (Column Q):
    • Provides detailed breakdowns of liabilities due within 12 months.
    • Calculated by taking the total LT Lease Liability for the month minus the opposite of the ST Lease Liability value.
  • LT & ST Liability EOM (Columns R & S):
    • Reflect the change in the ST & LT Lease Liability within the month.
Cash/Clearing Account & Other Entries
  • Cash/AP for Lease Payment at BOM (Column T):
    • Payment made between the 1st – 15th of the month.
  • Cash/AP for Lease Payments at EOM (Column U):
    • Payments made between 16th – end of the month.
  • Cash/AP for Variable Lease Expense Payment (Column V) & Cash/AP for Non-Lease Payment (Column W):
    • Payments made in the month for Variable and Non-Lease expenses.
  • Cash/AP (Summary of all Cash/AP Entries) (Column X):
    • Reflects the sum of all cash payments for the month.
  • Variable and Non-Lease Payments (Column Y to AA):
    • Specific entries made for variable expenses and non-lease costs are reflected in dedicated GL accounts.
Governmental Fund (Modified Accrual)

Calculates only the current cash flows of financial resources that are recognized. Long-term liabilities and assets are generally excluded, except when they directly impact the current financial resources.

For leases, this means recognizing payments or interest as revenues when they are due and collectible within the current period.

Expenditures are recorded when incurred, as long as they use current financial resources.

It includes recognizing payments (principal and interest) as expenditures when due, rather than recording a liability or capitalizing an asset, similar to accrual accounting.