Leases with nonstandard payment schedules

Idea Lab

Capture expense lease contracts with payment due dates that do not align with the regular lease term, supporting payments scheduled outside the standard lease period. Lease liability is calculated by discounting each payment from its specific due date to the lease commencement date. Interest expense is allocated using the effective interest method through the final payment period, while the right-of-use asset is amortized between asset start and end dates.

To create expense leases with flexible payment due dates:

1. Create an expense lease for property or equipment.
2. Create an asset and add a payment.
3. In the Create Payment page, select Standard or Flexible for Payment Due Dates and enter the First Payment Date.
4. Use Standard when all payment due dates fall within their associated payment periods.
5. Use Flexible when payment due dates can fall outside their associated payment periods, including prepayments and deferred payments.
6. Validate the lease, generate schedules, submit it for approval, and activate the lease.
7. Alternatively, use the Expense Lease Import utility to import new lease contracts with flexible payment due dates.

The following screenshots describe the process of creating an expense lease with flexible payment due dates:

Create Lease page

Create Asset page

Create Payment page

Schedules tab - Payment Schedules

Schedules tab - Amortization Schedules

Business benefits include:

• Supports compliance with accounting standards for leases featuring varied payment schedules by automating accurate liability and asset calculations.
• Provides flexibility to manage complex lease agreements, helping reduce manual adjustments and audit risk by reflecting real-world payment arrangements directly in the system.

Steps to enable and configure

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 27B

Perform the following configuration steps after you opt in to the feature:

1. Navigate to the Create or Update System Options page.
2. In the Expense Leases section, set Flexible Payment Due Dates to Yes.
3. Save the changes.

System Options page

For prepayment scenarios where the payment due dates fall before the lease amortization start date, perform the following configuration steps:

1. Configure the following new Journal Line Rules:

Journal Line Rules

Event Class	Journal Line Rule	Accounting Class	Line Type
Lease Booking	Lease Booking Prepaid Expense Right-of-Use	Asset	Dr
Lease Booking	Lease Booking Prepaid Expense	Asset	Cr
Lease Booking	Lease Booking Prepaid Expense Reserve	Liability	Cr
Lease Payment Approval	Lease Prepayment Payables Clearing	Clearing	Cr
Lease Payment Approval	Lease Prepayment Expense	Asset	Dr

2. Navigate to the Create or Update Expense Lease Payment Templates page.
3. Define the Prepaid Expense distribution account.
4. Save the payment template.

Expense Lease Payment Templates page

Key resources

Based on Ideas 888024, 883721, and 880258 from the Lease Accounting Idea Lab on Oracle Cloud Customer Connect.

Access requirements

No new access requirements.