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Lease Incentives

How to input lease incentives into Cradle

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Written by Support
Updated over a week ago

Refer to 1:57 of the video for an explanation on how to input lease incentives

** Please note if it's an incentive before commencement, it is input under the Right of Use Asset**

Lease incentives are used when the lessor grants the lessee a reduction to the fixed payment amount during the lease. The Initial Recognition tab is where most commonly, you will enter the lease incentives:

If an incentive occurs after the lease's commencement, it should be entered in the Modification tab.

When entering lease incentives, you should note:

  • You can enter the lease incentive amount either as a $ dollar or % percentage amount. For example, the fixed payment amount is $100 per month, and the lessor provides an incentive to reduce the fixed payment amount to $60. You can either enter $40 or 40%. The incentive is applied to the range covered and will pro-rata the payments accordingly.

  • If the lease incentive is only for a defined period and reverts to the original fixed payment, ensure to uncheck "No End Date."

  • With lease incentives, ensure the dates are entered correctly. For example, the lease commences on 2020-1-1 and expires on 2023-12-31, and there are two incentives. In January, there are no lease payments for the month. In February, the lessor provides a 40% discount on lease payments. You should enter the data like the following:

Payment Inputs and Incentives

A lease incentive is layered on top of the fixed and other payment amounts.

As a result, you don't need to edit the fixed payments for the incentive to work. For example, lets you input a $1,000 monthly payment:

Suppose you have an incentive in March with a $0 fixed payment. You do not edit the payment inputs. Just enter the incentive

Because of this there will be no payment in March.

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