Creating a Head Lease Agreement
First, like any regular lease, go to section New Leases and click New. A blank Lease Agreement Card will open.
Fill in Head Lease data as any usual lease (this is a lease contract with a lessor, where your company acts as a lessee). You can find an example below.
Creating a Sublease with One-to-One Tight relation
Go to section New Subleases and click New. A blank Sublease Card will open.
Fill in your sublease data. You can see the example of a sublease below (this is a sublease contract with a third party, where your company acts as a lessor).
To quickly access the Head Lease from the Sublease Card, you can use the action Show Head Lease.
Fields to note
Important fields to note in Sublease Card are Head Lease No. (highlighted above - ties the Sublease to the Head Lease), Head Lease Relation Type and Sublease Proportion, if the relation type is anything other than One-to-One Tight.
Activating Head Leases and Subleases
The head lease must be activated before the sublease. Before continuing, make sure all lease data is accurate, and the sublease has the latest information from the Head Lease, by selecting action Update from Head Lease, right before activation. Now, you are ready to continue.
On the Head Lease, select Sign, then Activate.
After activating the Head Lease, do the same with the Sublease - Sign, then Activate.
After these steps are complete, the G/L Entries for the Head Lease will look look as below.
G/L Entries for the Sublease will look look as below.
Impairment
Right-of-Use impairment will post during end-of-month postings.
Sublease Net Receivable
The move from Head Lease RoU Asset to Sublease Net Receivable is done via transit account RoU Asset Clearing, because two contracts are involved in the transaction (cannot post directly from one contract to another).
To read about monthly postings for subleases, head here.