Property Subleases
Create operating sublease contracts for properties leased by a designated business unit. Details of the sublease include terms of lease, property details, parties, billing schedules, and sublease-related options, rights, and obligations. The activation process generates the sublease booking transaction and enables the sublease for billing and periodic accruals processing.
The following screenshots describe the process of creating and managing a sublease.
Validate the lease and generate schedules. The schedule contains all lease payments and the periodic amortization of lease and non-lease revenue. Use the Schedules tab to view the schedules before lease activation.
Activate sublease contracts to complete the lease creation process. The activation process generates the lease booking transaction and enables the lease for billing and periodic accruals processing. Active contracts are available for viewing in read-only mode. A detailed report of the payment and amortizations down to the asset and payment level is available after contract activation.
Recognize sublease revenue each period according to IFRS16, ASC842, and Japanese GAAP. When the Lease Administrator creates the lease, the revenue recognition schedule is automatically generated. For operating subleases, the revenue is evenly spread over the revenue recognition term. The lease revenue recognition process creates the transaction to reduce the accrued asset balance and recognizes the revenue according to the schedule.
Create sublease invoices automatically in Receivables with the Revenue Lease Payments process to invoice sublessees for rent and other amounts included in the sublease. The Process Revenue Lease Payments process provides the ability to:
- Limit transfer of payments to one lease only, payments within a specific range of dates, a particular customer and bill-to site, payment type, and payment purpose.
- Launch Receivables Invoice Import as part of the lease process.
- Put payments on hold and subsequently release the hold.
The invoice number is available on the Schedules tab for a sublease after the payment interfaces to Receivables and the Process Lease Payment Tie Back process is run. Any exceptions that need action are available on the Lease Accounting dashboard.
Perform amendments to sublease contracts, such as changing payment amounts or the term of the contract. Amendments to a contract entail creating an updated version of the contract, adjusting accounted transactions and balances for the contract, and maintaining an audit of the changes. Additionally, perform nonfinancial changes to update attributes that do not require adjustments to accounted transactions and balances.
Perform the end of lease processing activities: exercise or cancel a lease option or terminate a sublease. Exercise a lease option to automatically put into effect the right conferred by the option; either to shorten or extend the lease. Cancel a lease option if the option wouldn't be exercised in the future. Terminate a sublease, fully or partially, if the sublessor or the sublessee needs to break the lease early. In all cases, the contract is automatically amended to adjust billing, revenue recognition, and accounting balances; and maintain an audit of the changes. Process lease expiration to close out sublease contracts that have reached the end of their life.
Business Benefits include:
- Standardize sublease information in a single repository through actionable user interfaces.
- Ensure compliance with IFRS 16, ASC 842, and Japanese GAAP lease accounting for subleases.
- Increase productivity and reduce the risk of error with automated lease processes for subleases.
- Reduce effort to bill and collect from sublessees through automated integration with the Oracle Receivables module.
- Improve operational efficiency with streamlined sublease amendments and terminations.
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 25B
Tips And Considerations
To create sublease for assets on a head lease:
- The Allow Subleases option must be checked on the head lease.
- Properties must be associated to the assets on the head lease.
Key Resources
- This feature originated from the Idea Labs on Oracle Cloud Customer Connect: Idea 596830
Access Requirements
You do not need any new role or privilege access to set up and use this feature.