Enter General Lease Accounting Information

Explanation

This activity is used to enter general information of the lease contract and the lease accounting related information.

Prerequisites

In order to enter information in the Header and the General tab of the Lease Accounting Contract window, the following must have been completed:

• The activities according to BDR for Lease Accounting must have been entered. The activity Enter Lease Contract Type is mandatory, and the activity Enter Lease Index Types should be defined only if the cash flows of the contract are depending on an index (Consumer Price Index, LIBOR rate etc.).
• The activities according to BDR for Fixed Assets Accounting must have been entered. These activities are optional, except for the Define Code Part for Fixed Assets Accounting activity.

System Effects

As a result of this activity:

• More information for the lease contract can be entered in the Terms and Conditions tab, the Interest Rates tab and the Other Payments tab.
• FA Object can be connected to the lease contract.

Window

Lease Accounting Contract
Lease Accounting Contracts

Related Window Descriptions

Lease Accounting Contract
Lease Accounting Contracts

Procedure

Use the following procedure to enter general information for a lease contract and the lease accounting related information:

Enter information in the header of the Lease Accounting Contract window:

1. Open Lease Accounting Contract in IFS/Fixed Assets/Lease Accounting and create a new record (F5).
2. Enter an ID for the new lease contract in the Contract ID field (maximum of 30 alphanumeric characters).
3. Enter a description for the new contract in the Description field.
4. Use the List of Values and enter the contract type as appropriate. (Note: This can be used to categorize the lease contracts. The field is mandatory and can be modified if the contract is in state Preliminary.)
5. Enter the currency code applicable to the lease contract in the Currency field. (Note: All the amounts shown in the contract are in the currency entered in this field. The amounts in Accounting Currency and Parallel Currency are calculated when creating postings based on the prevailing currency rates of the default Currency Rates Type.)
6. Enter the start date of the lease contract. (Note: This could be equal to the payment due date of the first installment if the agreement is to pay installments in advance (at the beginning of the period). If the installments are agreed to pay in arrears (at the end of the period), start date should be less than the payment due date of the first installment. Ideally the gap of the start date of the contract and the payment due date of the first installment should be equal to the payment interval (frequency) of the periodical lease payments to be made.)
7. Enter the expected end date of the lease contract. (Note: This could be the payment due date of the last installment if the agreement is to pay installments in arrears (at the end of the period). If the installments are agreed to pay in advance (at the beginning of the period), end date should be greater than the payment due date of the last installment. Ideally the gap of the end date of the contract and the payment due date of the last installment should be equal to the payment interval (frequency) of the periodical lease payments to be made.)

Enter information in the General tab of the Lease Accounting Contract window:

1. In the Time of Payment list, select the time of the payments made in accordance with the lease contract. Select End of the period if the payments are made in arrears (on the last day of each payment interval). Select Beginning of the period if the payments are made in advance (on the first day of each payment interval). Default value is set as End of the period. (Note: This cannot be changed when the Status is not Preliminary, and/or an Amortization Schedule has been created.)
2. In the Accounting Standard list, select the accounting standards applicable for lease accounting which are supported by the IFS Applications. IFS Applications support accounting standards issued by the International Accounting Standards Board -IASB (International Financial Reporting Standards - IFRS (IFRS 16) and the Financial Accounting Standards Board - FASB (United States Generally Accepted Accounting Principles - US GAAP (ASC 842)). Select the appropriate standard for the lease contract. IFRS is set as the default value unless the country of the company is not the United States. (Note: This cannot be changed when the Status is not Preliminary, and/or an Amortization Schedule has been created.)
3. In the Leasing Type list, select the type of the lease contract; Finance or Operating. If the Accounting Standard is IFRS, Leasing Type Operating is not allowed. Leasing Type decides certain calculations on Amortization Schedule and the postings under Lease Periodical Accounting proposals. (Note: This cannot be changed when the Status is not Preliminary, and/or an Amortization Schedule has been created.)
4. Use the List of Values and enter the supplier ID (lessor) as appropriate in the Supplier ID field. Suppliers that are registered in IFS/Enterprise/Supplier/Invoice can be entered as suppliers in this window. This is not a mandatory field. If you get invoices for periodical payments from the lessor, it is recommended to enter values for this fields.
5. Enter the purchase price of the asset taken on lease in the Asset Value field, if known. This is not a mandatory field.
6. Use the List of Values and enter the type of the lease index, if applicable when deciding the periodical payment amounts according to the lease agreement (Ex: Consumer Price Index, LIBOR Rate etc.) in the Lease Index Type field. in the Lease Index Type field.
7. Save the information (F12).

Note: You can also enter general information in Lease Accounting Contracts window. Then, select the Lease Accounting Contract to enter more information for the contract.