Configure Asset leasing as the Lessor

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Posted on by AV-04060812-0

Hi,

Is it possible to configure asset leasing as the lessor? Ie, Lease our current assets to a customer?

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Dynamics 365 Finance

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Saif Ali Sabri 2,195 Super User 2025 Season 1 on at

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Configure Asset leasing as the Lessor

In Microsoft Dynamics 365 Finance, the Asset Leasing module is currently designed to support lessee accounting only — that is, tracking leases where your organization is leasing assets from another party, not when you're the lessor leasing out assets to customers.
✅ Current Limitations:

Lessor functionality is not supported out-of-the-box in the Asset Leasing module.

Asset leasing is aligned with IFRS 16 and ASC 842, focusing on right-of-use asset accounting, which applies to lessees.

✅ Alternative Solutions for Lessor Accounting
To handle leasing out your assets (as the lessor), you can consider one of the following approaches:

🔹 Option 1: Use Project Operations or Revenue Recognition with Fixed Assets

Create the asset in Fixed Assets.

Use Project Operations or Sales Order processing to:

Set up lease agreements as subscription-based projects or long-term sales orders.

Use recurring billing to invoice customers periodically.

Recognize revenue via revenue recognition functionality (if applicable).

Manually track asset usage and depreciation if asset remains on your books.

🔹 Option 2: Use Subscription Billing (if available in your license)

Set up a lease contract as a recurring billing contract.

Add the leased asset as a non-inventory item or service.

Automate customer invoicing with correct lease terms.

Manage asset depreciation separately under Fixed Assets.

🔹 Option 3: Customization (if regulatory or financial reporting requires full lessor compliance)

Engage your D365 partner to customize the solution to:

Track leased assets.

Generate lease receivables and interest income schedules.

Comply with IFRS 16 lessor model (Operating Lease vs. Finance Lease classification).

🔚 Summary

Feature Supported in D365 Asset Leasing?

Lessee accounting ✅ Yes

Lessor accounting ❌ No (Not out-of-the-box)

Recommended: Use Project Operations + Fixed Assets or Subscription Billing for a workaround. For full compliance, customization is required.