Expense Recognition for Exempt Leases

Apply recognition exemptions to short-term leases, leases of low-value items, or leases with payments below capitalization thresholds. Lease administrators can recognize exempt lease payments as an expense on a straight-line basis over the lease term. The expense recognized per period is calculated by dividing the total lease payment by the number of periods in the lease.

To define an exempt expense with straight-line expense recognition:

1. Create an expense lease.
2. Add an asset and payment to the lease.
3. Navigate to the Accounting sub tab in the Payment Details page.
4. In the Exempt Expense section, select the Amortize Over Term checkbox.
5. Validate the lease and generate schedules.
6. View the Amortization Details schedule to see the expense recognition schedule.

The following screenshots describe the process of adding an exempt expense and viewing the schedule:

Payment Details - Summary page

Payment Details - Accounting page

Schedules - Amortization Details page

Business Benefits:

• Ensure compliance by recognizing expenses consistently over the entire lease term.

• Increase operational efficiency by ensuring that expenses are matched over the appropriate duration of asset usage, regardless of variations in actual lease payments.

Steps to Enable

Use the Opt In UI to enable this feature. For instructions, refer to the Optional Uptake of New Features section of this document.

Offering: Financials  No Longer Optional From: Update 25A

Access Requirements

You do not need any new role or privilege access to set up and use this feature.