Leases

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Open The Lease Register

Open Finance > Assets & Leases > Leases. You can also search for Leases in the command palette. Viewing needs permission to view accounting. Add Lease, Commence, Record Payment, Modify, Terminate, Buyout, Post ROU and recognizing leases need permission to manage leases; Post Monthly Entries needs permission to close periods. Creating a new vendor from the lease wizard also needs permission to create accounts. Other ways in: Add Asset on Finance > Assets & Leases > All Assets (choose Leased (ASC 842), then Continue) opens the Add Lease window for you; the lease buyout banner on a fixed asset links back to its source lease; and calendar entries open a lease’s payment window for that period. The lease register opens with four tiles you can collapse: Total ROU Assets, Total Lease Liability, Monthly Lease Expense, and Expiring in 90 Days. The table lists Code, Description, Classification, Monthly, ROU Balance, Liability, Expiration, and Status; use the Columns menu to show or hide them, the tabs to choose All, Active, Expiring Soon, Expired, or Terminated, and the filter bar to narrow by Classification (Operating or Finance) and Asset type (Real Estate, Equipment, Vehicle, Other). Click a row to open the lease. Two banners can appear above the table. “lease not linked to a vendor” warns that “1099-MISC Box 1 (Rents) reporting and Check Register integration need every lease to reference a vendor account”. “commenced lease not recognized to GL” appears when a lease has passed its commencement date but its opening entry has not posted: “Until recognized, the balance sheet understates both the ROU asset and the lease obligation (ASC 842-20-25).” If you open a lease link while working in a different one of your companies, Arcus looks for the lease in your other companies and switches you with “Switched to (company) to open this lease.” If none of them holds it, the page reads “Failed to load lease.”

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Create A Lease

1. Open Finance > Assets & Leases > Leases.
2. Click Add Lease. You can Start from template to prefill common terms (Arcus confirms Applied template: [name]), or click New for a blank lease.
3. Enter the lessor, description, asset type (Real Estate, Equipment, Vehicle, or Other), dates, payment amount, and payment frequency. If the lessor is not a vendor yet, use Create Vendor.
4. Choose operating or finance classification.
5. Confirm the discount rate, lease term, and accounting accounts. Help me choose opens Help me choose a discount rate (IBR): pick your credit standing, Excellent (720+, established), Good (680-720, solid), or Fair (below 680, or newer credit), then Suggest rate or Apply midpoint to fill in a defensible starting rate.
6. Expand Present Value Breakdown to see each payment next to its discounted value and the total present value that becomes the lease liability. It fills in once the term, monthly payment and discount rate are set.
7. Click Create Lease, or Create + Download Memo to also save the accounting memo documenting the classification judgment.
8. Commence the lease when it is ready to begin posting (Lease commenced).

Arcus requires a lessor vendor, asset type, commencement date, and term before it lets you continue, and a monthly payment and discount rate before it will calculate present value. The messages you can meet are “Pick a Lessor vendor, Asset Type, Commencement, and Term to continue”, “Monthly Payment and Discount Rate are required”, and, when you create a vendor on the spot, “Vendor (name) created” or “Failed to create vendor”. Creating a vendor here needs permission to create accounts. Once a vendor is picked the wizard says “Linked to vendor account. Payments to this lessor roll up into 1099-MISC Box 1 Rents.”; with none it says “A lease with no linked vendor cannot surface in the Check Register or 1099 reports.” The classification step scores the lease against the ASC 842 criteria. Until the monthly payment and discount rate are filled in it says “Fill monthly payment and discount rate to see the classification.” If a criterion cannot be tested because a fair value or economic life is missing, the wizard names it (“Without fair value, criterion 4 cannot be evaluated.”), and if you continue anyway the downloaded memo carries a caveat paragraph. After Create Lease you see “Lease (code) created”, and after Create + Download Memo also “Classification memo ready”.

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Lease Status And Actions

• Pending: the lease is saved but not commenced.
• Active: the lease is posting according to the amortization schedule.
• Expiring Soon: the lease is active and nearing its end date.
• Expired: the scheduled term has ended.
• Terminated: the lease was ended before or at the end of its term.
• Bought out: a finance lease was bought out and moved to fixed assets.

Pending leases whose commencement date has passed still need their opening entry (right-of-use asset against lease liability). The register lists them with Recognize all and Recognize selected so you can post those opening entries in one step. Only a few buttons appear for each status on the lease’s own page: Commence shows on a pending lease; Record Payment and Terminate show on an active lease; Buyout shows on a finance lease that is active or expired and has not already been bought out; Modify shows for every lease but is refused for a pending or terminated one.

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Daily Lease Workflows

• Commence: starts the lease accounting schedule and activates the lease, posting the opening right-of-use asset against the lease liability (Lease commenced).
• Post Monthly Entries: queues the recurring lease accounting entries for open periods (“Lease posting queued”; “Run failed” if it could not start). Needs permission to close periods.
• Record Payment: records the payment against the lease schedule for a period. If Arcus cannot match the date you enter to a schedule row, it says No schedule row matches that period date. Pick from the suggestions.; if that period already posted, it says This period is already posted.
• Modify: records a change to terms, payments, or assumptions and posts the resulting remeasurement. Choose the modification type: Rent change only, Term extension, Term reduction, Scope reduction (partial termination), or a change large enough that Arcus adds a separate contract and creates a new linked lease instead of remeasuring this one. Review the preview, tick “I understand this will post a remeasurement journal entry”, then Post Modification (Lease modified, remeasurement posted, or Separate contract added, new lease created). A modification that changes the classification says so and re-establishes the lease under the new classification. A modification cannot be un-posted: the only way to reverse it is a new, offsetting journal entry.
• Terminate: ends the lease and records the termination impact. Enter the termination date, review the gain or loss preview, and confirm (Lease terminated). Arcus posts a gain or loss entry that zeroes both balances, plus any termination fee as expense. Without a date or a reviewed preview you see “Termination date required” or “Review the gain/loss preview before confirming”. A terminated lease cannot be modified, paid, or commenced again.
• Buyout: for eligible finance leases, ends the lease by moving it to a fixed asset. Enter the buyout date and payment method, which can be Check, ACH, Wire, Cash, Credit Card, or No cash outflow (term-end transfer) when ownership simply transfers at the end of the term with no additional payment. The window shows the purchase option on the lease and a preview of the entry: it debits the new fixed asset at its carrying value, debits accumulated ROU amortization, and debits the lease liability, against a credit that removes the gross ROU asset. The new asset takes the lease’s category and location. Until you pick a date it says “Pick a buyout date to preview the balanced JE.” Review the preview, tick the acknowledgement, and Confirm Buyout; without a date or the tick you see “Buyout date required” or “Review the preview and tick the acknowledgement before confirming”. On success Arcus shows Lease bought out. New fixed asset [asset] created., the lease becomes Bought out, and its Overview shows “This finance lease was converted to a fixed asset. ROU asset and lease liability derecognized; new fixed asset created.” with a View fixed asset link.
• Post ROU: on the amortization schedule, posts a right-of-use amortization entry for a period through Post ROU Amortization (ROU amortization posted for period [date]; the window shows the ending ROU balance and notes that posting the same period twice returns the existing entry instead of posting again). This applies to finance leases; an operating lease’s ROU amortization is folded into its payment entry instead of posted separately.

Pending leases whose commencement date has already passed show Recognize all and Recognize selected to post their opening entries together; Arcus reports how many were recognized and says No pending leases were recognizable when none qualify.

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How Lease Payments Post

Settings > System > Lease Configuration controls how Record Payment posts money for this entity. The window tells you which route a payment will take before you post it.

• Direct journal entry. The payment debits the lease liability and interest and credits your bank account. It does not appear in the Check Register (“Payment will post a direct journal entry. Cash and “other” methods do not produce a Check Register row.”).
• Vendor bill route (hybrid mode). The payment creates a vendor bill and an AP payment for the lessor and queues a check for printing (Lease payment posted. Check queued for printing., with a View Check Register shortcut), using the Default Bank Account and Default AP Liability Account from that settings page unless the lease’s own accounts override them. Use it when you want lease payments to go through the same check run and AP aging as your other vendor bills.
• When the setting has never been switched on or off, Arcus chooses for each payment: a lease with a linked lessor vendor paid by Check, ACH, Wire, or Credit Card takes the vendor bill route; Cash, Other, or a lease with no linked vendor posts directly (“No vendor linked to this lease. Payment will post a direct journal entry only and will NOT appear in the Check Register.”).
• Turning on Track payments through Vendor Bills (hybrid mode) sends every payment down the vendor bill route. If a lease has no linked vendor, Arcus says Hybrid mode is ON for this entity but this lease has no linked vendor. Link a vendor before posting, or turn off hybrid mode in Settings. Turning it off always posts directly.

The bill’s date. On the vendor bill route the bill is dated on the schedule period you are paying. Nobody is at the keyboard to answer a refusal when the date is outside your entry date window (see Fiscal Year), so in that case the bill posts today instead and its activity trail records that the date was moved. Inside the window it posts on the period date, even if that is in the future. Operating and finance leases also differ in the payment window’s allocation preview: a finance lease posts its right-of-use amortization as a separate entry (“Finance leases post ROU amortization as a separate JE”), while an operating lease folds amortization into the payment entry (“Operating leases fold ROU amortization into the payment JE as a plug.”). A period that already posted says “This period already has a posted JE. Pick a different unposted period.” and a lease with no schedule (short-term leases of 12 months or less, and pending leases) says “No amortization schedule exists for this lease. Short-term leases (12 months or less) and pending leases have no schedule; commence the lease first.”

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Detail Tabs

The lease page header shows the description or lessor, a status badge, a Finance or Operating badge, the lease code, and the lessor, with a Back to Leases link.

• Overview: tiles for Monthly Expense, Remaining ROU, Remaining Liability, and Remaining Term; Lease Terms (code, lessor, asset type, commencement, expiration, term in months, monthly payment, discount rate, annual escalation, short term); Financial Summary (initial ROU asset, current ROU balance, initial liability, current liability); and the ASC 842 Classification Criteria that supported the classification (“No classification criteria recorded.” when none were saved). A lease with no linked vendor shows the link-vendor banner with Create Vendor and Link Vendor (“Vendor linked”, “Failed to link vendor”; linking and creating need permission to manage leases, and creating also needs permission to create accounts).
• Amortization Schedule: scheduled lease liability, interest, ROU asset, and payment rows, with Post ROU on each row you can post (permission to manage leases).
• Payments: payment history and recorded payment references.
• History: every modification, reclassification, scope change, and separate-contract addition, each with a View JE link to its journal entry, a Reversal link when one exists, and a New lease link when a separate contract was created. With none it reads “No modifications recorded. All ASC 842 remeasurements, reclassifications, scope changes, and separate-contract additions will be logged here with the resulting journal entries.”
• Memos: the classification memos for the lease. Generate new memo (permission to manage leases) creates the next version (“Classification memo v(n) generated”; “Memo generation failed” if it could not) and Download opens the PDF. With none it reads “No memos yet. Generate one to document this lease.”

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Common Problems

• Lease cannot commence: confirm required dates, payment terms, classification, and accounting accounts.
• Monthly entries did not post: check status, schedule, permissions, and whether the period is open.
• Payment does not match schedule: verify payment amount, partial payments, timing, and modification history.
• 1099 rent reporting is incomplete: link the lease to the correct vendor and review 1099 vendor flags.
• Buyout does not create the expected asset: confirm the lease is finance-classified and eligible for buyout.

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