Likely options
Based on contractual or non-contractual business reasons or unexpected economic conditions, you might be prompted to change the expected lease term. If that occurs, you can click
to identify the “likely option”, or the lease option that is most likely to be exercised.The identified option determines the new end date for the likely term. The list of options is filtered to show only active selections, and only valid Option Type field selections are used to determine the likely term: Renewal, Termination, or Purchase Option.
When you select the “likely option” to be exercised, the application sets a new Likely
Term Expiration Date based on the following logic:
- If you select the Purchase Option, then the application extends the amortization to the
Likely Purchase Execute as the Likely Term Expiration Date. You can
specify the Purchase Price Effective Date for when the purchase will be
accounted for. If this date is not picked, the Accounting End Date will
be defaulted. Note: For GASB Lessor Accounting standard lease, Purchase Option is for Information purposes only and is excluded from the accounting schedules in accordance with standard.
- If you select the Renewal option, then the application extends the amortization to the Renewal Expiration Date as the Likely Term Expiration Date.
- If you select the Termination option, then the application extends the amortization to the Likely Termination Execute Date as the Likely Term Expiration Date.
- If none of the options are likely to be exercised, then the application uses the base lease Expiration Date as the Likely Term Expiration Date.