Leases — Controller Guide

ASC 842 puts your leases on the balance sheet: a right-of-use asset, a lease liability split current and noncurrent, and a straight-line expense that is not the same as the rent you pay. This screen holds the lease terms and derives all of that from them. It assumes you run a business but aren't a career government accountant.

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Why this screen exists

Most teams keep the ASC 842 schedule in a workbook — one tab per lease, formulas dragged down a hundred rows, and a monthly entry copied out of it by hand.

Arcvue stores the terms instead and computes the schedule from them. You enter six numbers; the liability, the interest, the straight-line expense, the right-of-use amortization and the current/noncurrent split all follow.

That matters for one specific reason: a schedule you can recompute is a schedule you can defend. When an auditor asks why the liability is what it is, the answer is the lease terms, not a workbook whose formulas nobody has re-read in three years.

Where it lives

Accounting → Leases. Three cards across the top: Active leases, Operating, Finance. Below them, the register — every lease, searchable and exportable.

Entering leases needs edit access to Leases. + Add lease and the Read a lease document panel appear only for a role your permission matrix gives edit access to Leases. A role with view access sees the cards, the register and every schedule, and nothing that would change them — and the server refuses a lease write from such a role even if one is attempted. If you can see the register but not + Add lease, ask whoever administers your permissions for edit access to Leases.

Adding a lease

+ Add lease opens the form. Twelve fields, and it is worth knowing which do what, because only six change the math.

The six that determine the schedule:

• Commences — the commencement date.
• Term incl. renewals (months) — the renewal judgment lives inside this number. If you are reasonably certain you will exercise a five-year renewal on a five-year lease, the term is 120 months, not 60. There is no separate renewal switch, because that judgment is yours and the schedule is only as good as it.
• Discount rate (%) — typed as you'd say it, 4.375. Four decimal places is the limit.
• Payments made — In advance or In arrears. See below; this one is not cosmetic.
• Monthly payment ($) — the base rent, which generates a level schedule you can then edit.
• The payment rows themselves, once generated.

The four accounts — Right-of-use asset, Liability — current, Liability — noncurrent, and Lease expense — come from your chart of accounts, each filtered to the right account type. Arcvue does not know your account numbers and never guesses one; a lease posts to the accounts you picked or it does not post at all.

Lease name and Classification (Operating or Finance) identify the lease and do not affect the arithmetic.

Legal entity is not in that group. It does not change a single number in the schedule, and it decides whose books carry the ROU asset and the lease liability. Tag it wrong and the balances land in the wrong entity and will not tie — months later, with nothing pointing back at this form.

You cannot mistype it: it is a picker over your own configured entities, and it defaults to your primary entity, so a tenant that runs a single entity never has to touch the control at all. If the entity you need is missing from the list, add it in tenant configuration — there is no way to type one in here, and that is deliberate.

note

In advance vs in arrears is worth a moment. A payment made at the start of the month is not discounted for that month; one made at the end is. Across a long lease that single offset moves a seven-figure liability by five figures. It is stored per lease rather than assumed, so set it to match the contract.

The preview is the point of this screen

Nothing is saved while you type. As soon as the parameters produce a schedule, Arcvue shows you four figures and the whole thing:

• Opening liability — what lands on the balance sheet at commencement.
• Total payments — the cash you will pay over the term.
• Total interest — the difference between the two.
• Monthly expense — the straight-line charge, which is usually not the monthly rent.

Entering a lease is entering six numbers you then live with for years. Look at the preview before you commit, particularly the monthly expense: if it differs from the rent, that difference is the whole reason ASC 842 exists, and it is about to show up in your P&L every month.

If the parameters cannot produce a schedule, you get the reason in place of the preview rather than a saved lease that computes to nothing.

Rent steps

The generated schedule is level. Real leases step.

Open N contractual payments · $X total — edit for rent steps and set any month to any amount. A rent-free month is 0.

warning

Changing Commences, Term or Monthly payment rebuilds the payment rows from scratch and discards steps you have typed. Editing an individual payment never does. So enter the shape of the lease first, then the steps — not the other way around.

Why Add lease stays grayed out

It needs all of: a lease name, a legal entity, a discount rate, all four accounts, a preview that actually computed, and a payment schedule with exactly as many rows as the term has months. Any one missing and the button stays disabled rather than saving a half-finished lease.

The legal entity is the one item on that list you will rarely be missing — it arrives pre-set to your primary entity. The four accounts and the payment schedule are what usually hold the button.

The Paid column is the payment timing, and it reads in advance or in arrears. It is not a wording preference — it is which end of the period the payment lands on, and that changes the discounting, so a lease entered with the wrong timing produces a schedule that is wrong from the first month rather than merely mislabeled. Cancel abandons the form without adding the lease.

Reading a lease document into the register

Everything above is a lease you type in. You can also hand Arcvue the document and have it read: Read a lease document takes a PDF — Choose a lease document (PDF) — extracts the ASC 842 terms and expands the payment schedule from them.

What the document cannot tell you is what you settle, and the panel asks for exactly those things:

• Choose an entity — which of your legal entities holds the lease.
• Term, months incl. renewals — the renewal judgment. A document states options; whether you are reasonably certain of exercising them is your call, and it belongs in the term.
• Discount rate % — when the document states no rate, the field points you at your own incremental borrowing rate rather than inventing one.
• Choose an account on each of the four postings, and the classification.

Then you see the liability those terms imply, before committing to anything.

Nothing reaches the register until you accept. Accept into the register stays unavailable until the preview has computed, an entity is chosen and all four accounts are set — the rate and the term are not gates, because the reading already proposed both.

The reading is kept beside what you accepted, so months later you can see what the document was read as and what you changed it to. That is the point of reading a document rather than typing it: the disagreement is recorded, not smoothed over.

If the reading is wrong, say why. Why this reading is wrong is required — Set aside does nothing while it is empty — and setting a reading aside does not throw the document away: it stays, and it can be read again.

Reading the schedule

Click any row in the register to open its schedule.

Column	What it is
Period	Month end.
Opening	Liability at the start of the month.
Payment	Contractual cash for that month.
Interest	The liability unwinding — accretion.
Closing	Liability at month end.
Current	The part of the closing balance retiring within twelve months.
Noncurrent	The rest.
Expense	Straight-line lease expense.
ROU	Right-of-use asset remaining.

Current and Noncurrent appear only on a saved lease, not in the preview.

Two properties hold by construction, so if either looks broken it is worth a second read rather than a correcting entry:

• The liability closes at exactly zero, and so does the right-of-use asset. Every period is computed independently and the final one absorbs the remainder. There is no residual cent to write off.
• Current and noncurrent always sum to the closing balance. The noncurrent side is computed as the remainder rather than on its own, so the two halves cannot drift apart.

The current portion is principal, not payments

This is the one number people get wrong, and it is worth being precise about.

The current portion is the principal that comes off over the next twelve months — for each month, the payment minus the interest that accrued alongside it. It is not the sum of the next twelve payments.

Classifying whole payments as current overstates your current liability by the interest embedded in them, and that is exactly the error that makes a lease footnote disagree with its own schedule.

What Arcvue posts, and when

Arcvue posts the monthly lease entry on its own — one balanced batch per active lease, for each open period inside the lease term. It runs daily and looks back over the last few months, so a lease entered today is caught up for the periods still open. Closed periods are skipped, never reopened.

Two things about the shape of that entry will look wrong if you are expecting a textbook illustration, and both are deliberate:

• There is no separate interest line. The accretion is real and the schedule computes it, but it is netted into the entry rather than presented on its own. A standalone interest line would put a row in your P&L your books have never had.
• The current/noncurrent reclass happens every month, inside that same entry, rather than annually or at close.

The rent expense leg is left out entirely when cash rent equals the straight-line charge — a zero line is a wash an auditor has to ask about.

A lease whose accounts are missing, or point at something that isn't yours, is skipped and surfaced — never posted half-coded.

What this deliberately does not model

Initial direct costs, lease incentives, prepaid rent at commencement, remeasurement, and impairment.

Each is a real ASC 842 input and each is a judgment you supply, not something that can be derived from a rate and a term. Rather than guess at one, Arcvue leaves it out. When you need one it becomes a field you fill in and a conversation about what it should be — which is the right way round for a number that ends up on an audited balance sheet.

If a lease of yours needs one of these today, handle it as a manual entry and say so in the lease's notes.

When something looks wrong

What you see	What it means	Fix
"the schedule has N payment(s) and the term is M month(s)"	The payment rows and the term disagree about when the lease ends.	Correct one of them. Arcvue will not interpolate a schedule it was not given — a liability computed over the wrong number of months is wrong everywhere downstream.
"two payments share a due date"	Two rows landed on the same day.	A rent change is a different amount on a different date. Fix the dates.
"carries more precision than parts per million can hold"	The discount rate has more than four decimal places.	Round it to four.
"This lease has no payment schedule yet"	The lease saved but its payments did not.	Reopen it and add the schedule.
"These parameters do not produce a schedule"	Usually a term of zero, a negative payment, or a malformed date.	The message names the parameter; correct that one.
The monthly expense isn't the rent	Correct, and expected.	Straight-line expense spreads total consideration evenly; rent does not. The difference is the point of the standard.
The register shows a lease I terminated	Terminated leases stay on the register with their end date.	That is deliberate — the history is what supports the periods you already posted.

Where to go next

• How a period closes, and what "closed" prevents → Month-End Close
• The other schedule-driven balance-sheet item → Prepaid Expenses
• Where these entries land → General Ledger