Theory and Practice
✘ Does not strictly required in General Ledger by Accounting Standards
✔ Typically a Lender or Investor requirement
At period end, the balance is split between its Current and Non-Current components:
| Account | Debit | Credit |
|---|---|---|
| Lease Liability (Non-Current Portion) | $114,409.03 | |
| Lease Liability (Current Portion) | $114,409.03 | |
| On the period-end date, the Current Portion of the Lease Liability is removed (debited) from the Non-Current Lease Liability account and separated into a separate GL Account. | ||
On the first day of the next period, the split is reversed:
| Account | Debit | Credit |
|---|---|---|
| Lease Liability (Current Portion) | $114,409.03 | |
| Lease Liability (Non-Current Portion) | $114,409.03 | |
| On the first day of the next period, the Current Portion of the Lease Liability is returned (credited) back to the Non-Current Lease Liability account from the separate GL Account. | ||
Doing it in Sage Intacct Lease Accounting
The creation of the Current/Non-Current split journals are optional in Sage Intacct. To enable them, follow the steps documented here.
Once a lease has been placed in service, GL entries can be generated automatically or as manually initiated by a user. Read more on this topic here.
Below, the two journal entries are shown as created in Sage Intacct:
