Adding a new lease

Manual entry vs. AI extraction

Navigate to Leases → Add Lease to open the creation form. You have two options:

• Manual entry: Fill in each field yourself. Ideal when you already have terms summarized in a spreadsheet or need to enter a simple lease quickly.
• AI extraction: Upload a PDF, Word document, or scanned image. Arvexi Cortex reads the document, identifies key terms, and pre-fills every field. You review and confirm before saving.

With AI extraction, Cortex highlights the exact clause it pulled each value from. Click any extracted field to jump to the source passage in the document viewer.

Required fields

Every lease record needs the following fields before it can be saved and activated:

• Commencement date: The date the lessee takes possession or begins using the underlying asset. This anchors the amortization schedule.
• End date: The contractual termination date, excluding any renewal options that have not been exercised.
• Payment schedule: The base rent amount, frequency (monthly, quarterly, annual), and payment timing (beginning or end of period).
• Escalations: Fixed-rate increases, CPI-linked adjustments, or step-rent schedules. Each escalation type has its own input pattern.
• Renewal options: Optional periods the lessee can extend the lease. Mark each option as “reasonably certain” or not. Reasonably certain renewals extend the lease term for measurement.
• Purchase options: The price and whether exercise is reasonably certain. A bargain purchase option typically triggers finance lease classification.

Asset types

Assign every lease one of the five supported asset types. This drives default useful-life assumptions and reporting groupings:

• REAL_ESTATE: Office space, retail locations, warehouses, land.
• EQUIPMENT: Manufacturing machinery, construction equipment, medical devices.
• VEHICLE: Fleet vehicles, forklifts, company cars.
• IT_EQUIPMENT: Servers, networking hardware, copiers, laptops under capital lease.
• OTHER: Anything that does not fit the categories above.

Classification

Each lease must be classified as either OPERATING or FINANCE (called “capital” under legacy standards). Arvexi applies the five-factor test from ASC 842 automatically:

1. Transfer of ownership at end of term
2. Bargain purchase option reasonably certain to be exercised
3. Lease term is a major part (≥75%) of the asset’s remaining economic life
4. Present value of payments ≥90% of the asset’s fair value
5. Specialized asset with no alternative use to the lessor

If any factor is met, the lease defaults to FINANCE. You can override the classification with a reason note, which is retained in the audit trail.

Saving and activation

After filling in the required fields and confirming classification, click Save as Draft to store the lease without generating any accounting entries. Draft leases appear in the lease register with a “Draft” badge.

When you are ready to go live, open the draft and click Activate. Activation does three things:

1. Calculates the initial right-of-use (ROU) asset and lease liability using the incremental borrowing rate (IBR) you set.
2. Generates the commencement-date journal entry (debit ROU asset, credit lease liability, with any prepaid or initial direct cost adjustments).
3. Creates the full amortization schedule through the end of the lease term, including any reasonably certain renewal periods.

Once activated, the lease is locked for the commencement period. Future changes go through the modification workflow, which records a remeasurement event and adjusts the schedule prospectively.