1. Using Lease Accounting
  2. Process Lease Accounting

Process Lease Accounting

You can process lease accounting from the side panel using the Process Lease Payments.

Process Lease Payments

  • Select Process Lease Payments from the panel to run the program.

  • The following parameters are available in Basic Options:

    • Process Type:

      • Accruals: This will process all accruals.

      • Sweep Accounting - Review Mode: This will sweep all the transactions that haven't been posted to GL when the GL period is closed for some reason into the next open period.

      • Sweep Accounting - Update Mode: This will update all the transaction dates in the stuck period to dates in the next open period.

      • Lease Payments: This will process the lease payments.

    • Business Unit: Select the business unit name.

    • Lease Number: Enter the lease number.

    • Period: Select the period for which you want the process to run.

  • Oracle Lease Accounting notifies you when the process completes if you check the notify check box.

  • Click Submit to run the process.

  • You must run Create Accounting after the update.

Process Short Term and Long Term Lease Liability

Both IFRS and USGAAPs mandate that the liabilities must be reported into two buckets: Short Term and Long Term Liability. Lease Liability also being one of the component of Liability, this requirement is applicable for Lease Liability as well.

Short Term Lease Liability refers to the discounted Lease Liability from payments which are due in the next 12 months from the reported period end.

Long Term Lease Liability refers to the discounted Lease Liability from payments which are due for the periods greater than 12 months from the reported period end.

Key Advantages

  • Short Term and Long Term Lease Liabilities accounted balances match with the scheduled balances.

  • Data readily available for compliance reporting.

Steps

You can run the reclassification of liablities process using the Accruals parameter.

The following rules will apply to the reclassifed liabilities:

  • Lease Liability reclassification is generated as part of the Accruals process.
  • You can select only the period post latest run 'Accruals' period from the business unit.
  • Transaction date of the Liability reclassification is the same as the accruals transaction for a particular period. GL date follows the regular GL dating rules.
  • If there is an amendment backdated prior to a reclass transaction, then earlier reclassification transactions are all reversed and new reclassification transactions created for each of those prior periods.
  • You can perform Liability reclassification only if you select the Reclass Lease Liability checkbox in the system setup options available.
  • The payments marked with Liability flag only are included in the Lease Liability reclassification.
  • Computational rules set up in the system options apply.

Secondary Ledger Calendar:

  • The Lease Liability reclassification follows the same method of splitting liability for secondary ledger liability as well.
  • The secondary ledger calendar is the reference point for the date of splitting. For example, if Jan-Period is from 01-Jan-22 to 31-Jan-22 in the primary ledger calendar, but 15-Jan-22 to 14-Feb-22 in secondary ledger calendar then:
    • For primary ledger, the liability balance as on 31-Jan-22 is split between short term and long term.
    • For secondary ledger, the liability balance as on 14-Feb-22 is split between short term and long term. This liability balance, if need be, has to be derived first.
    • The short term liability payments are considered from the period end date in the respective calendars.
    • The program can't be run for those periods that have end dates in the future.