What is a Suspense Account and How is it Used?

A Suspense Account is used for Revisions

In the LeaseCrunch software, suspense accounts are used for Revisions. For all revisions, when complete, the old version of the lease will be frozen. The final journal entry for the prior revision will zero out the Balance Sheet accounts (ROU Asset, LT Lease Liability, ST Lease Liability) and post the difference to the suspense account.

The Suspense Account is used:

When the ROU Asset does not equal the Lease Liability on the terminated version of the revision (Revision 1)
To record the ROU Asset and Lease Liability on the new revision.

For accurate reporting, be sure to select all versions of the lease.

Example:

The following lease was terminated early and the Journal Entries for both Revision 1 and 2 are as follows:

Account	Debit	Credit
LT Lease Liability	$7,237.17
ROU Asset		$7,053.87
Gain/Loss Account		$183.30
Suspense Account for Transferred Balances	$183.30	$183.30
LT Lease Liability	$1,059.12	$7,237.17
ST Lease Liability	$6,178.05

For an early termination, a gain is recorded when the carrying value of the ROU Asset is reduced to zero. The suspense account nets to zero.

A further breakdown of the Revision 1 and Revision 2 Journal Entries is below.

Revision 1: The final entry for the frozen lease.

Account	Debit	Credit
ROU Asset		$7,053.87
Suspense Account for Transferred Balances		$183.30
LT Lease Liability	$1,059.12
ST Lease Liability	$6,178.05

Revision 2: The new entry for the Revision. In the case of early termination where the remaining lease term is 1 month, this is the final entry for all lease versions.

Account	Debit	Credit
ROU Asset	$7,237.17
Gain/Loss Account		$183.30
Suspense Account for Transferred Balances	$183.30
LT Lease Liability		$7,237.17

Since the suspense account nets to zero, it does not need to be recorded in financial statements.

If the suspense account does not net to zero, it's likely that all versions of the lease were not selected when reports were exported.