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How a difference between ROU and Lease Liability for migrated lease is cleared

Summary:

Hi,

We are migrating the leases from legacy system (Property manager) to Fusion Lease Accounting. Quantum is more than 13000 leases.

For migration, we are following the standard approach where R.O.U closing balance is given and Amortization start date is used

Now at the time of migration,there is a difference between lease liability and R.O.U balance, to cater this difference, system generates a balancing entry to balance the ROU and lease liability and hits that difference in the reserve account.

Please guide how will this reserve account will be nullified?

If this reserve account which is used at the time of migration ,hits the P/L as an income or expense account, the client won't allow us to follow this approach as this will impact their Profits and Losses and eventually auditors and tax authorities will raise concerns and may impose financial penalties.

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