Before You Begin

This 10-min OBE shows you how to set up the bill codes for the payments that will be made for this lease. Bill codes are used to generate payments for both the recurring billing and manual billing processes. They are also used to define the payments that are reflected on the lease liability and right of use asset amortization schedules.

Background

Many businesses lease office space and equipment from different suppliers. According to the new lease accounting standards, businesses must account for these leases and the leased asset on them on their balance sheets. The Lease Accounting functionality in JD Edwards provides the ability to comply with these standards.

Scenario Guidelines

In this series of OBEs, you will learn how to set up the system and perform the required actions for following lease scenario:

• You are leasing a copier from Electronics R Us.
• The lease is for two years and you expect to return the copier at the end of the lease.
• You will pay $2,500 quarterly in advance.
• You have to pay an up-front installation charge of $1,000 to secure the lease.
• At the beginning of the second quarter, you renegotiate the price of this lease based on an agreement to lease other equipment from the vendor and they agree to a price break on the existing lease. Your new quarterly payment will be $2,250 starting from the second quarter.
• At the end of the second quarter, the copier breaks down and the cost of repairs is greater than the replacement cost, so you negotiate with the vendor to terminate this lease and create a new one for a newer copier model.

What Do You Need?

You must have completed the following tasks:

• Set up AAIs.

Setting Up Bill Codes

1. Navigate to EnterpriseOne Menus, Financials (G1), Lessee Accounting (G15202), System Setup (G1520240), RE System Setup (G1520241), Bill Codes/Adjustment Reasons (P1512).
2. On the Work with Bill Codes/Adj Reasons form, click Add to add a new bill code.
3. On the Depreciation Default Coding form, complete these fields in the header:
   • Bill Code: LPMT
   • Building: Leave this field blank.
   • Description: Lease Payment
   • Commercial/Resid/Both: C
   • Lease Accounting:
     • Effect on Lease Liability: Yes
     • Effect on Right of Use Asset: Lease Payment

Leave all other fields blank. These fields are automatically populated with default values.

Your bill code record for LPMT should look like this.



4. Click OK to save the entries.
5. Add another bill code. Complete the following fields:
   • Bill Code: IDC
   • Description: Lease Initial Direct Cost
   • Lease Accounting:
     • Effect on Lease Liability: No
     • Effect on Right of Use Asset: Initial Direct Cost

Leave all other fields blank. These fields are automatically populated with default values.

Your bill code record for IDC should look like this.