FRS 102 Transition on Balances Already in Your Records

What you enter

Choose Use the balances in your records, then enter the opening lease liability and the opening right-of-use asset (net book value, which may be nil where the asset is fully written down) at the transition date, and a short note of the source. The rate per your records is optional. Prepaid and accrued rent are not asked for: the asset in your records already holds them.

The rate the schedule runs at

The remaining payments are priced at the rate you give. Where that reproduces the stated liability within one pound, the stated rate is used. Otherwise, or where no rate was given, Lease102 works out the rate at which the remaining payments are worth exactly the stated liability, so the schedule unwinds to nil at the end of the lease. The dialog previews both rates and the difference before you press Calculate, and the memo records them.

FRS 102 Reference: FRS 102 para 20.49

What Lease102 refuses

A stated liability above the remaining payments, or one so low that no rate under 50% reproduces it, is refused with the reason: the rent rows, the payment timing or the frequency do not match the previous records. A negative asset is refused. Check the lease's rent rows against the records and try again.

Journals and the ledger

The balances are already in your ledger, so no opening journal is produced: the lease is marked as posted elsewhere. Journals start from the first month after the transition date, with interest at the rate used and depreciation straight-line from the stated asset over the remaining term. A nil asset produces interest only.

Many leases at once

Bulk Calculate offers the same choice for a batch. Two columns take each lease's liability and asset per your records, Preview rates shows the rate each schedule will run at and any difference it absorbs, and the ledger totals you type are checked against the batch totals before anything is stored.

Filling the batch from a spreadsheet

Rather than typing each figure, choose a file (.xlsx or .csv) or paste rows from one under Fill from a spreadsheet. Lease102 finds the reference, liability, asset and rate columns by their headings, matches each row to the leases in the batch by reference (case, spaces and punctuation are ignored, and a second reference column such as a property code is tried), and fills the columns. Rows that match no lease are listed with suggested leases to match them to by hand; leases the file has no row for are named. A monthly ledger, one row per lease per period with a Period column, is read at the month before the transition date, and the periods found are offered in a selector. Nothing is stored until Calculate.

Importing new leases with their balances

The Excel or CSV lease import maps four more optional columns: the opening liability, the opening asset, the date the balances are taken at, and the rate per records. A ledger extract's Closing Liability and Closing Asset headings are recognised. A monthly ledger is collapsed to one row per lease at the latest period in the file; the payment frequency and amount are inferred from the pattern of payments across the months and marked for review. The review screen shows the balances under Opening balances per records, and on approval the lease is created and transitioned on them in one step. Where that cannot be done (the option is not switched on, a balance is missing, or the stated liability cannot be reproduced from the lease terms) the lease is still created and the reason is shown.

The asset note, a carried provision and the opening entry

Three optional figures complete the picture. The asset's cost and accumulated depreciation per your records (under For the asset note in the dialog, or columns in a balances file) make the Right-of-Use Assets Note roll forward from that cost, with the depreciation and impairment brought across shown on a Carried on transition line, so the net amount is the stated asset. A dilapidations provision carried in your records accretes from that balance to the restoration obligation recorded on the lease by its settlement date, the unwinding charged as a finance cost each period; the lease needs a restoration component with its amount and date, and the Provision Revisions tool does not apply (recalculate with the new carried balance instead). The opening entry: by default none is produced, the balances being already in your ledger; choose Post the opening entry where the balances are being moved into this ledger, and the opening journal posts the asset against the liability with the difference to the Transition Clearing Account, which you clear against the balances brought across.

FRS 102 Reference: FRS 102 para 21.11

Undoing a batch and reconciling it

Tick transitioned leases on the Transition screen and click Reset Selected to clear their transitions in one action; where any has posted journals you are asked once, with the leases named. The Reconciliation button downloads a workbook for the audit file: every transitioned lease with its opening liability and asset, how they were set, the present value at the stated rate and the difference the rate absorbs, both rates, Year 1 interest and depreciation, totals, and the ledger control totals you typed in the bulk dialog.

Whose decision it is

Whether the balances in your previous records are the right opening position for FRS 102 is a matter for you and your auditors. Lease102 records which method each lease used, the source you gave, both rates and the present value at the stated rate, in the audit trail, on the lease page and on the transition memo.