ROU Impairment

*Please Note that Modifications are not included in the free version.

Use Case: A ROU impairment of a lease can also be referred to as a partial termination. It removes the right to use one or more underlying assets, or shortens the contractual lease term. An example of this is reducing the amount of square footage rented in a building.

Prerequisites: It is best practice to review the lease entries and confirm the changes you intend to make to the term, discount rate, and payment schedule.

Effective Date: Note that the effective date is the date when both parties agree to the lease modifications. Therefore, the month in which the agreement is obtained is most likely the date that it should be recorded within NetLease.

Step By Step Process:

1. Navigate to the lease record where the modification is to be recorded and select the Lease Action drop down then choose Modify Lease.

2. On the Lease Modification page update the Modification Type to ROU Impairment

3. The fields are prepopulated with the current lease attributes. Note that modifiable fields are Modification Type, Effective Date, ROU Impairment Amount, Discount Rate %, and Notes.

4. Update the following as necessary for the lease modification (refer to the guidance for appropriate adjustments per your modification type).

5. Once all the fields have been updated click Modify Lease.

6. You can view the completed lease modification at the bottom of the lease record under Modifications.

*Note that a new option will appear in the Lease Action drop down menu to Reverse Last Modification.