The quick answer
Go to Fixed Assets > Transactions > Asset Depreciation, select the lease asset's asset type and subsidiary, enter the Depreciation Period and a Depreciation Reference, and click Depreciate Assets. Refresh FAM Process Status until the process is Completed with no errors, then check the asset, its Depreciation History and the journal. For an operating lease, the journal generally debits the Depreciation Charge Account on the asset, here Lease Rental Expense, and credits accumulated depreciation. Record Lease Interest is a separate process with its own journals. For an operating lease it generally debits accumulated depreciation and credits Lease Liability, and for a finance lease it generally debits Interest Expense. Neither process records the payment to the lessor, and the interest journal is not a row in the asset's depreciation history.
The screenshots show sample data. Person and operating-company names are fictional. Journal numbers are sample values too. Use your own lease, asset and accounts when following the steps.
Before you start
This example continues Lease 22, an operating lease with 24 monthly payments of 2,400.00 from 07/01/2026 at 6.0%. The payments total 57,600.00 and their net present value is 54,421.64. The lease is at Asset Created, so its right-of-use asset, FAM000093, exists with Original Cost 54,421.64 and Asset Lifetime 24. Record Lease Interest has already run through 09/30/2026. Nothing has been depreciated.
You need Fixed Assets Management and a role that can run FAM processes and create journals. The example assumes one accounting book, standard journals with no approval (with approvals on, the journal can wait for approval instead of posting), an open July 2026 period, and an asset type that is set up for operating leases with its own Depreciation Account and Depreciation Charge Account. Check those on Fixed Assets > Setup > Asset Types before the first run, and check the lease's Posting Reference subtab for its Right-of-Use Asset, Lease Liability and Interest Expense accounts, which are separate. This guide covers the primary accounting book only. With Multi-Book Accounting, alternate methods or custom depreciation journals, check each book, method and journal separately, because a custom journal can wait for its own approval. Required department, class or location values can also stop a journal from being created.
If you are not sure the lease belongs in FAM at all, check your lease policy first. A short-term or low-value lease you chose to expense has no right-of-use asset to depreciate.
01. Check the lease and its interest
Go to Fixed Assets > Leases > Lease and click View on Document Number 22. The status next to the number reads Asset Created, and the Transaction, Asset Proposal and Asset fields are linked.
Open the Lease Amortization Schedule subtab. The 07/01/2026 row has Interest 0.00, Principal 2,400.00 and no Journal Entry. The 08/01/2026 row has Interest 260.11 and links Journal #JE326. The 09/01/2026 row has Interest 249.41 and links Journal #JE327. Interest has been recorded for those two rows, and no depreciation has been posted.
02. Check the asset before depreciation
Click the Asset link on the lease to open FAM000093. Asset Original Cost is 54,421.64, Asset Lifetime is 24, Cumulative Depreciation is 0.00, Current Net Book Value is 54,421.64 and Asset Status is New. Asset Is Leased is checked. Residual Value is -3,178.36, with Residual Value Percentage 0.0%.
The negative residual is unusual, so read it before you run anything. FAM schedules straight-line depreciation of (Original Cost - Residual Value) / Asset Lifetime. That is (54,421.64 + 3,178.36) / 24 = 2,400.00, which equals the monthly lease payment in this example. On leased operating assets, FAM shows a calculated negative residual of 3,178.36, the lease's total interest, so that straight-line depreciation adds up to the payments. Do not read it as a salvage value, do not change it to zero, and confirm it on your own generated asset. A finance lease with the same cost, a straight-line method, no residual and the same lifetime would depreciate 54,421.64 / 24 = 2,267.57 a month. The amount always depends on the lease terms and the asset type setup.
Click the Depreciation History subtab, then click Depreciation Histories on the Accounting Method row. In this account the grid lists the newest rows first, so find rows by type and date. The last scheduled row, 06/30/2028, ends at Net Book Value -3,178.36, so FAM will depreciate the cost plus the negative residual, 57,600.00 in all, the total of the lease payments.
Scroll to the bottom. The Acquisition row is dated 07/01/2026 for 54,421.64. The Depreciation rows dated 07/31/2026, 08/31/2026 and 09/30/2026 each show 2,400.00, with Net Book Value 52,021.64, 49,621.64 and 47,221.64. Their Posting Reference is blank, so they are scheduled, not posted.
If the history shows only the Acquisition row, the schedule may not have been generated yet. Depending on how the asset was created and your FAM settings, wait for the scheduled generation or run Precompute Depreciation Values from Fixed Assets > Setup > System Setup.
03. Run depreciation for July
Go to Fixed Assets > Transactions > Asset Depreciation. The Depreciate Assets page opens. In Asset Type, select Right-of-Use - Equipment. In Subsidiary, select Tidewater Cold Storage : Tidewater East, and leave Include Children clear.
In Depreciation Period, enter 07/31/2026. This is an "up to" date, not a label for one month. FAM depreciates every eligible unposted row through the period that contains the date, including earlier periods. The next scheduled rows here are dated 08/31/2026 and 09/30/2026, so 07/31/2026 posts July only. Entering 09/30/2026 would post all three months. FAM normally creates depreciation journals by asset type and period. In one test of a two-month catch-up, the history rows for both months linked a single journal whose date and posting period were not the period end. If a run that covers several periods does that in your account, check the journal's date, posting period, lines and source history rows before you rely on it.
In Depreciation Reference, enter ROU equipment Jul 2026. The reference goes on the journal lines.
Click Depreciate Assets. NetSuite opens FAM Process Status.
04. Follow the process to completion
The new Asset Depreciation process is at the top of FAM Process Status with status Queued. Click Refresh. The status changes to In Progress, and Process Stage shows the current stage, here 2/7: Create Journal Entries. Keep clicking Refresh until the status reaches Completed, then open Details and confirm that no stage has errors. A Completed status alone does not prove the run worked.
Click Details on that row. In this example 2/7 Create Journal Entries shows Transactions created: 1 and 4/7 Update Asset Records shows Assets/Tax methods updated: 1. The other stages are Completed or Not Required, and the Errors column is empty. Stage names and counts change with tax methods, alternate books, compound assets and custom journals.
A stage that completes with errors needs attention before you run anything again. If Prepare Data to Update Records completes with errors, the journal and the history link can exist while Cumulative Depreciation and Current Net Book Value stay unchanged. Check the stage errors, the journal and the asset header separately. Do not rerun until you know whether a journal was created, which history rows have a Posting Reference and whether the asset header was updated, and follow your correction procedure before you retry.
05. Confirm what posted
Go back to Lease 22 and click the Asset link. Cumulative Depreciation is now 2,400.00, Current Net Book Value is 52,021.64 (54,421.64 - 2,400.00), and Asset Status is Depreciating.
Open Depreciation History > Depreciation Histories again. The 07/31/2026 row now shows Journal #JE331 in Posting Reference. The 08/31/2026 and 09/30/2026 rows are still blank, because only July was in the run.
Click Journal #JE331. It is dated 07/31/2026, in posting period Jul 2026, for subsidiary Tidewater Cold Storage : Tidewater East. On the Lines subtab, 6910 Lease Rental Expense is debited 2,400.00 and 1486 Accumulated Depreciation : Acc. Depr. - Right-of-Use Equipment is credited 2,400.00. Both lines carry the memo ROU equipment Jul 2026 (FAM). The asset type supplies these accounts when the asset is created, but the journal uses the accounts on the asset itself, so check the asset's Accounts subtab and not only the asset type. The date and posting period are the result under the open-period, standard-journal assumptions above. A closed period can send the journal to a later open period.
Check the result
- Asset Depreciation is Completed on FAM Process Status, with no errors in its Details.
- FAM000093 shows Cumulative Depreciation 2,400.00, Current Net Book Value 52,021.64 and Asset Status Depreciating.
- The 07/31/2026 history row links Journal #JE331, and the August and September rows are still blank.
- JE331 is dated 07/31/2026 in Jul 2026 and debits Lease Rental Expense and credits accumulated depreciation for 2,400.00 each.
06. Compare it with lease interest
Go back to Lease 22 and open the Lease Amortization Schedule subtab. On the 07/01/2026 row, Interest is 0.00 and Principal is 2,400.00, so July had depreciation of 2,400.00 and no interest. The asset's Current Net Book Value, 52,021.64, equals the schedule Balance on that row only because July has no interest. The first payment is treated as made in advance here, so a lease paid in arrears or starting mid-month shows different first-period values. Schedule payment dates fall on the first of the month and depreciation rows on month end, so the two will not share a date.
The 08/01/2026 row has Interest 260.11 and Principal 2,139.89 on Journal #JE326. When August depreciation is posted it will again be 2,400.00 on the asset's history. The interest journal for an operating lease generally debits accumulated depreciation and credits Lease Liability, using the accounts on the lease's Posting Reference subtab, so it offsets 260.11 of that depreciation. For a finance lease it generally debits Interest Expense instead. Record Lease Interest also works only on a lease that has reached Asset Created. The net movement in accumulated depreciation for August is 2,400.00 - 260.11 = 2,139.89, the principal on that row.
The interest journal does not change the asset record's Current Net Book Value, and it is not a row in the asset's Depreciation History. In later periods, reconcile the lease liability to the combined general ledger balances of the right-of-use asset and its accumulated depreciation, in the right book, subsidiary and period, and not to the asset record alone. Neither process records the payment to the lessor. That goes through your normal bill or payment process.
Common questions
Why is the residual value negative on my lease asset?
On this operating-lease asset, FAM shows a Residual Value of -3,178.36, the lease's total interest, even though Residual Value Percentage reads 0.0%. It makes straight-line depreciation add up to the lease payments, so the monthly amount is 2,400.00 and not the 2,267.57 a zero residual would give. Don't change it to zero, and confirm the amount on your own generated asset.
How is the 2,400.00 of monthly depreciation calculated?
FAM divides Original Cost minus Residual Value by Asset Lifetime. Here that is (54,421.64 + 3,178.36) / 24 = 2,400.00, which happens to equal the monthly lease payment. A finance lease with the same cost, a straight-line method, no residual and the same lifetime would depreciate 54,421.64 / 24 = 2,267.57 a month.
What does Depreciation Period mean on the Depreciate Assets page?
It's an "up to" date. FAM depreciates every eligible unposted row through the period that contains the date, including earlier periods. Entering 07/31/2026 posts July here, and entering 09/30/2026 would post July, August and September. After any run that covers more than one period, check the journal date and posting period.
Should I record lease interest or run depreciation first?
Neither depends on the other, so the order isn't fixed by NetSuite. In this example interest was already recorded through 09/30/2026 before July was depreciated. Whatever order you use, run both for the period and reconcile the results, because a modification or correction to the lease can change both schedules.
Why doesn't the asset's net book value match the lease liability?
The asset's Current Net Book Value only changes with its depreciation history, and the interest journal doesn't touch it. After July the asset shows 52,021.64 and the schedule Balance is also 52,021.64, but only because July has no interest. For August, 2,400.00 of depreciation less 260.11 of interest leaves a net movement of 2,139.89 in accumulated depreciation, which is the schedule's principal. Reconcile the liability to the general ledger balances of the right-of-use asset and its accumulated depreciation.
What should I do if the process shows errors?
Open Details and read the stage errors before you run anything again. If Prepare Data to Update Records completes with errors, the journal and the history link can exist while Cumulative Depreciation and Current Net Book Value stay unchanged. Check the stage errors, the journal and the asset header separately, and follow your correction procedure before you retry.
Which accounts do the depreciation and interest journals use?
The depreciation journal uses the accounts on the asset. Here it debits 6910 Lease Rental Expense and credits 1486 Accumulated Depreciation for 2,400.00. An operating-lease interest journal generally debits accumulated depreciation and credits Lease Liability, using the accounts on the lease's Posting Reference subtab. A finance-lease interest journal generally debits Interest Expense. Neither process records the payment to the lessor.