Hi, I want to know how lease payments are treated in NetSuite. Let's say we leased a van for 36 months. The lease record shows £1000 for each month. Out of the £1000 we need to account £200 for the lease interest. We create journals in NetSuite to account for the interest payment. Now how should I record £1000 lease payment per month? It's a payment to the lessor every month. Thanks in advance

lease module is "attached" to FAM; every month there are two journals - one for interest through lease schedule and another for "principal" through FAM depreciation journal. There is no payment (to vendor) record, just two journals - interest and principal. Originally there is lease balance journal recorded as well to account for the full amount of lease. There are reports (not journals) for short term and long term leases from which you can make manual reclass journals

Thanks Karina, Both interest and depreciation journals are on nominal accounts. Neither of them hit the bank? Here's where I struggle to understand how NetStuite accommodates the lease payment.

no, no bank here. What it does though is the loan amortization in these two journals. that's all it does.

One way is to record a Bill each month with two line items, (i) the principai paid against the long term liability GL account, and (ii) the interest paid against the interest expense account. This moves the current portion of the liability to AP. Then when you make the payment you record the payment against the bill and that eliminates the short term liability and clears the cash account.

Thanks both, it appears there's no standard or designated method to pay the lease monthly. What Karina is suggesting would only record the interest and depreciation in balance sheet and it doesn't hit the payable and bank. Regarding the solution form Edward - we have already received a bill from the vendor showing a total of 36k. We don't need to create a bill every month. I believe we need to pay £1k of the bill every month. On the same note - we can't select the vendor bill in the asset record as 'Parent Transaction'?

Monthly lease payment = £1,000 Interest portion = £200 Principal / reduction of liability = £800 Since you already create journals for interest, the cleanest approach is: -Record the cash payment: Debit Lease Liability £800 Debit Interest Expense £200 Credit Bank £1,000 -For clarity, you can set up a recurring journal for £1,000 split monthly -If using NetSuite amortization: Create Amortization Template for the lease Post monthly amortization automatically Reduces manual bookkeeping

Thanks @CadeTechMax it all makes sense up to NetSuite Amortisation Template. How an amortisation template can be created for the lease? Also the supplier bill is sitting in NetSuite, how would you treat the bill?

1) How to create a lease amortization template You’re essentially building a schedule that splits each payment into: • Interest expense Lease liability reduction • (and separately) ROU asset amortization Create a spreadsheet (or NetSuite saved schedule) with these columns: Period Opening Lease Liability Payment Interest Principal Ending Liability Step 1: Inputs you need • Lease term (e.g., 36 months) • Payment amount (e.g., $5,000/month) • Discount rate (incremental borrowing rate) • Lease start date Step 2: Initial recognition At lease commencement: • Right-of-Use (ROU) Asset • Lease Liability Both typically equal the present value of lease payments Step 3: Build the schedule For each period: Interest calculation

Interest = Opening Liability × Discount Rate

Principal

Principal = Payment – Interest

Ending Liability

Ending Liability = Opening – Principal

Then roll forward: • Next period opening = previous ending Step 4: ROU asset amortization Usually: • Straight-line amortization

ROU Amortization = Total ROU Asset ÷ Lease Term

Thanks, I'll give it a go and let you.

@Merk If it isn't obvious from their responses, be forewarned that CadeTechMax is just a bot. You're probably better off asking #C06V7S5E77Z or just whatever your favorite LLM is, if that's what you want.

Yeah... The “Parent Transaction” field in an asset record is typically auto-populated from the source transaction. If the asset was created from a Vendor Bill, that bill can be the parent transaction. However, you usually can’t manually select or change it freely in the asset record UI.

shameless plug for a third-party app, NetLease. Automates all things IFRS 16. Native SuiteApp. Happy to help if needed - cstewart@netgain.tech https://www.netgain.tech/netlease-for-netsuite