Amortization Example for Leased Assets

This example shows the entries that you make in Deltek for a capital lease that will be amortized.

This process involves making journal entries, entering the capital lease as an asset item in the Equipment hub, entering an AP voucher, and running depreciation processing in the Asset Management application to calculate amortization.

Scenario

• Lease term: 10 year lease for machinery
• Lease payments: $6,000 per month x 120 months = $720,000
• Present value of lease payments: $422,385 (capitalized leases value)

Entries in Deltek

1. In the Transaction Center, post a journal entry to record the capitalized lease.
   • Debit: Capitalized Leases - Machinery
   • Credit: Obligation under Capital Leases Current
   • Credit: Obligation under Capital Leases Long-term
2. In the Equipment hub, add the machinery as an asset item.
   • In the Acquisition Cost grid on the GL Cost tab, insert the capitalized lease value of $720,000.
   • On the GL Book tab, select Lease in the Calculation field, and enter the lease details on the tab.
3. In the Transaction Center, post the lease payments as an AP voucher.
   • Debit: Interest Expense
   • Debit: Obligation under Capital Leases Current
   • Debit: Property Tax
   • Credit: Cash
4. In Asset Management > Depreciation Processing, run depreciation processing for the machinery.

   The following general ledger entries are posted:

   • Debit: Amortization Expense of Capitalized Leases - Machinery
   • Credit: Accumulated amortization - Capitalized Leases -Machinery
5. As required, post a journal entry in the Transaction Center to adjust the current and long-term obligation under capital leases.
   • Debit: Obligation under Capital Lease Long-term
   • Credit: Obligation under Capital Lease Current