1. Using Lease Accounting
  2. Create Leases

2Create Leases

This chapter contains the following:

Overview of Lease Creation

You can reach the lease creation page from the Navigator, by clicking Lease Accounting.

A lease creation page is organized into four tabs:

  • The Overview tab has key lease information as well as accounting classification and expense amortization details. You can search for existing lease contracts in the header region.

  • The Assets tab has the asset information. For property contracts, this includes information such as tenancy dates and location. For equipment contracts, this includes information such as item, model, number of units, and location.

  • The Payment tab displays the payment details, including disbursement terms, schedules, and accounting treatment for the payment.

  • The Validation tab ensures all information is correct before generating cash flows and the amortization schedules. Any errors in the validation process appear on the validation tab.

How Leases Are Created

Once all the required setups are completed, you can start the creation of lease and assets and their related payments.

To access the lease creation:

  1. From the Navigator, click Leases.

  2. The Lease page will be displayed. The header section displays the search parameters for leases. In the body section, you can view the lease information.

  3. Click New to open the Create Lease page.

  4. These fields are available as part of the lease creation:

    Field Description

    Business Unit

    Select the business unit that you want the lease to be associated with.

    Legal Entity

    Select the legal entity.

    Lease Start Date

    Select the start date of the lease.

    Lease End Date

    Select the end date of the lease.

    Lessor

    Select the name of the lessor of the lease.

    Asset Type

    Select the type of asset. The valid options are Property Lease and Equipment Lease.

    Accounting Classification

    Select the account class. The valid options are Finance Lease or Operating Lease.

    Discount Rate Index

    Select the discount rate index for the lease.

  5. Click Save and Continue

  6. The entire lease contract will be displayed and you can include further information pertaining to the lease in the various tabs.

  7. In the Overview tab, you can add or update the following lease information under the Lease Details section:

    Field Description

    Lease Name

    Retain or change the lease name.

    Accounting Classification

    Retain or change the account class.

    Description

    Enter an description for the lease.

  8. In the Overview tab, you can add the following lease term information under the Term Details section:

    Field Description

    Lease Start Date

    Retain or change the lease start date.

    Lease End Date

    Retain or change the lease end date.

    Lease Term

    The calculated lease term is displayed in Years, Months, and Days.

    Date Signed On

    Enter the date the lease was signed on.

How Amortizations are Created

Amortizations start along with the lease start date and ends with the lease end date. You can view the discount rate index and the selected rate in the Lease page.

In the Overview tab, you can view or add the following amortization information under the Amortizations section:

Field Description

Amortization Start Date

Select the amortization start date of the lease. The default date is the lease start date.

Amortization End Date

The amortization end date is the same as the lease end date.

Discount Rate Index

Retain or change the discount rate index.

Discount Rate

The discount rate is displayed based on the select discount rate index.

How You Select Proration Method

The proration method is required to calculate the amortizations.

In the Overview tab, you can add the following amortization information under the Amortizations section:

Field Description

Proration Method

Select the amortization proration method. The valid values are 'Days/Month' and '360 Days/Year"'

How You Use Rate Adder

The rate adder is used to give additional discount more than given in the discount rate index.

In the Overview tab, you can add the following amortization information under the Amortizations section:

Field Description

Rate Adder

Enter the rate adder for the amortization, if required.

How You Give Document Details

Document details for a lease include who the lease has been assigned to and who had abstracted the lease.

In the Overview tab, you can view or add the following document information under the Document Details section:

Field Description

Document Start Date

Select the document start date of the lease. The default date is the lease start date.

Document End Date

Select the document end date of the lease. The default date is the lease end date.

Abstracted By

Select who has abstracted the lease.

Assigned To

Select who has the lease been assigned to.