Revenue Equipment Leases

Create operating revenue lease contracts for equipment. Details of the lease include terms of the lease, asset details, parties, billing schedules, milestones, rights, and obligations. After capturing this information, lease administrators can activate lease contracts to complete the lease creation process. The activation process generates the lease schedules and booking transaction and enables the lease for billing and periodic accruals processing.

To create a revenue lease for equipment:

1. Create a revenue lease and select the asset type as Equipment and select a financial product. The financial product defaults the accounting template and the primary and secondary accounting classifications for the lease. 
2. Update lease details such as the lease name, lease term details, party, proration method, and document details.
3. Create an asset and update asset details such as the asset term, item details, fair market value, and residual amount. 
4. The accounting template and distributions defaults from the financial product and may be updated as needed.
5. Update the asset serial number and link a fixed asset number from Oracle Assets.
6. Create rent payments by selecting the payment category as Rent.
7. Update payment details such as payment amounts, frequency, number of payments, and transaction tax details. Associate the payment to an asset.
8. Create payments for sundry charges such as service, maintenance or administrative fees by selecting the payment category as Others.
9. Update payment details such as payment amounts, frequency, number of payments, and transaction tax details. Optionally associate the payment to an asset.
10. The accounting distributions and accrual type default from the payment template and may be updated as needed.

The following screenshots describe the process of creating a revenue equipment lease:

Create Lease page

Lease Details page

Create Asset page

Asset Details page

Asset Details Accounting tab

Asset Details Serial Numbers tab

Create Payment page - Rent

Payment Details page - Rent

Payment Details Accounting tab - Rent

Create Payment page - Others

Payment Details page - Others

Payment Details Accounting tab - Others

SCHEDULES

Validate the lease and generate schedules. The schedule contains all lease payments and the periodic amortization of revenue from rent and other payments. Use the Schedules tab to view the schedules before lease activation.

Schedules - Amortization Summary

ACTIVATION

Activate lease 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.

Lease Detail Report

Business benefits include:

• Standardizes lease information in a single repository.
• Enables compliance with lease accounting standards for revenue equipment leases.
• Increases productivity and reduces the risk of error with automated lease processes along the entire lease lifecycle.

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 26D

If you plan to adopt this feature, then you must log an SR with Oracle Support to get a code.

Perform the following setups:

Manage Lease Accounting Configurations:

• Define System Options for Revenue Leases. Enable revenue leases for equipment. Enable Receivables and Assets integration and select Item Master.

System Options page

Manage Lease Accounting Configurations

• Create Policy. Select the Primary Asset Corporate Book and Secondary Asset Tax Book. Update the policy status to Active.

Policies page

Manage Lease Accounting Configurations

• Create Accounting Template. Select the primary and secondary accounting classifications and distributions for accounting the rental accrual and payments for the leased asset. Update the accounting template status to active.

Create Accounting Template page

Manage Lease Accounting Configurations

• Create Financial Products. Select the primary and secondary accounting classifications and associate an accounting template. Activate the financial product.

Create Financial Product page

Manage Lease Accounting Configurations

• Create Revenue Lease Payment Template for rent payments. Select the asset type as Equipment and the payment category as Rent and enter the payment and transaction tax details.

Create Payment Template page - Rent

Manage Lease Accounting Configurations

• Create Revenue Lease Payment Templates for sundry charges. Select the Asset Type as Equipment, Payment Category as Others and enter payment and transaction tax details.
• Select the accrual type from the following:
  • Amortize - Generate recurring income amortization over the payment term.
  • None - Do not generate income amortization.

Create Payment Template page - Others

Tips and considerations

Document Sequences for Leases: Set up document sequencing to assign document numbers to revenue leases. In the Manage Document Sequence setup task, create a document sequence and associate the sequence with the Lease Accounting Revenue Lease Sequence Category and the applicable business unit.

Key resources

Based on Idea 639735 from the Lease Accounting Idea Lab on Oracle Cloud Customer Connect.

Access requirements

The Lease Revenue Contract Management Duty (ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY) is seeded.  You can manually add this duty to any role.

Assign the ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY_OBI to the same role that the Lease Revenue Contract Management Duty is assigned.

The Manage Lease Configuration privilege is assigned to the Financial Application Administrator.  Please use this role to complete the Lease Accounting setup configuration.

Privileges and Role Association

Privilege Name and Code	Role Name and Code
Manage Lease Configuration FLA_MANAGE_CONFIGURATION	Financial Application Administrator ORA_FUN_FINANCIAL_APPLICATION_ADMINISTRATOR_JOB
Manage Equipment Revenue Lease Contract FLA_MANAGE_EQUIP_REVENUE_CONTRACT	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY
View Equipment Revenue Lease Contract FLA_VIEW_EQUIP_REVENUE_CONTRACT	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY
Generate Equipment Revenue Lease Amortization Schedule FLA_MANAGE_EQUIP_REVENUE_AMORTIZATION	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY
Authorize Equipment Revenue Lease Invoices FLA_AUTHORIZE_EQUIP_REVENUE_INVOICES	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY
Manage Equipment Revenue Lease Invoices FLA_PROCESS_EQUIP_REVENUE_INVOICES	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY
Manage Equipment Revenue Lease Accruals FLA_PROCESS_EQUIP_REVENUE_ACCRUALS	Lease Revenue Contract Management Duty ORA_FLA_LEASE_REVENUE_CONTRACT_DUTY