Acquire Lease Asset
Explanation
This activity is used to terminate the lease contract by clicking the Acquire Lease Asset
on the Lease Accounting
Contract page.
Prerequisites
In order to terminate a lease contract, the following must have been
completed:
- A fixed asset object of type Right-of-use must have
been connected to the lease contract.
- Status of the lease contract should
be in the status Active.
- Lease Accounting Periodical Proposals must have been created and posted for the
required accounting period(s) until the Termination Date.
- Lease Accounting Payable Proposals must have been
created and posted for the installment(s) due until the Termination
Date.
- If the Leasing Type of the contract is Finance,
depreciation proposals must have been created and posted for the required
accounting period(s) until the Termination Date.
- The Posting Types FAP 81, FAP 82, FAP 83, FAP
84, FAP 85, FAP 86, FAP 87, FAP 88, FAP 89, FAP 90, FAP 91 and FAP 92 must
have been defined in Posting Control page.
- A voucher type with Function Group A must have been
defined in Voucher Type page.
-
If the
Leasing Type of the contract is
Operating and the contract currency is different to the accounting or parallel
currency, the automatic termination postings cannot be created. For such
contracts, the termination should be handled manually.
System Effects
As a result of this activity:
- Amounts suggested for the Balances-Lease Liability,
Balances-Right of Use Asset, Acquisition
Information and Posting Information are
based on the given Termination Date.
The
calculations and values of each category are explained below.
Balances-Lease Liability
The lease liability balance in accounting and parallel currency of the lease
contract by the termination date are shown here. The values are
not editable.
Balances-Right of Use Asset
Acquisition: The balances of
the right of use asset in accounting and parallel currency by the
termination date are shown in the Acquisition field. The values are
not editable.
Depreciation/Amortization: The
accumulated depreciation/amortization balances of the right of use asset in
accounting and parallel currency by the termination date are shown here.
If the Leasing Type of the
lease contract is Finance, these fields show the accumulated depreciation
balances in accounting and parallel currency based on the book specified in
the Book ID field. If the Leasing Type of the lease contract is Operating,
these fields show the balances of the Periodical ROU Asset- Amortization in
accounting/parallel currency posted through the Lease Periodical Accounting
Proposal(s) for the respective lease contract. The values are not editable.
Net Book Value (NBV): The net book values of the right of use asset in
accounting and parallel currency are shown here.
These values are the respective acquisition values in accounting/parallel
currency minus respective accumulated depreciation/amortization balances in
accounting/parallel currency. The values are not editable.
Acquisition
Information
The information relating to the asset that will be considered
as a normal fixed asset thereafter can be entered in these fields.
Further, the Purchase Price to be paid for acquiring the
lease asset can also be defined. This should be defined only when the
purchase price is not included in the terms and conditions as a One-Time
Payment in calculating the present value of minimum lease payments.
Posting Information
Currency Differences – Gain/(Loss): The total
realized currency gains or losses pertaining to the lease liability in
accounting and parallel currency by the termination date are shown in this
field. This happens in foreign currency contracts where the Recognition
Postings are created at one rate and the Lease Accounting Proposals are
created at different rates. In such instances, when calculating the currency
gains/losses, the lease liability is re-calculated at the
accounting/parallel currency rates prevailed when creating the Recognition
Postings. Then the difference between the actual lease liability balance
(shown in the Balances-Lease Liability field) and such re-calculated
lease liability balance is considered as a Currency Difference- Gain/(Loss)
in the Acquire Lease Asset
dialog.
Acquisition – Adjustment
Value: The value that is required to be adjusted for the acquisition value
of the new asset in accounting/parallel currency. This is applicable only when using
the Acquire Lease Asset command.
The value is
calculated as the difference between the purchase price in
accounting/parallel currency and the lease liability in accounting/parallel
currency adjusted for the respective currency differences.
Example:
The
values (hypothetical) given in the following example are in accounting currency only
and the same is applied for parallel currency.
Lease Liability:
CU 1250
(A)
Right of Use Asset - Acquisition: CU 1000 (B)
Right of Use Asset -
Depreciation/Amortization: CU 600 (C)
Right of Use Asset - NBV:
D = B - C
= (1000-600)
= CU 400 (D)
Currency Differences – Gain (Loss):
CU –250
(E)
Purchase Price (in Accounting Currency): CU 2200 (F)
Acquisition –
Adjustment Value: G = F - (A - (E))
= 2200 - (1250 - (-250))
=
2200 - 1500
= CU 700
The
CU 700 will be adjusted to the
acquisition value of the new asset through a new posting type FAP 91 with a
counter posting to a new posting type FAP 92.
Note: If the calculated
Adjustment - Acquisition Value is a negative value, the maximum value that
can be adjusted is limited to the Net Book Value (NBV) to be transferred
from the right of use asset to the new asset. So, in the above example, if
the Adjustment - Acquisition Value is calculated as CU -700, the maximum
value that can be adjusted to the new asset is limited to CU -400. That is,
up to the NBV of the asset. So, the Adjustment - Acquisition Value is
suggested as CU-400 and the remaining CU -300 is considered as a
Termination
Gain.
Termination Gain/(Loss): In this instance, a value
is only shown if there is an excess negative Adjustment - Acquisition Value
(as explained in the above example) in accounting currency over the Net Book
Value of the right of use asset in accounting currency. Such gain is posted
using the posting types FAP 83 and FAP 84 (Counter Posting) as similar to
when terminating a lease contract.
- Voucher(s) is/are created and transferred to the hold table in
Accounting Rules.
When acquiring a lease asset, the NBV of the
existing right of use asset should be transferred to the acquired asset.
Also, the difference between the purchase price in accounting/parallel
currency and the lease liability in accounting/parallel currency adjusted
for the respective currency differences is considered as an adjustment to
the acquisition value of the acquired asset. A summary of the postings in
Acquire Lease Asset is explained below using the values in the example
explained above.
|
Posting Types- Acquire Lease Assets |
Description |
Balances/Values per Account |
| 2398- Lease
Liabilities |
1265- Right-of-use
Assets |
1275- Accumulated
depreciation on ROU Assets |
9385- Lease
Termination Interim Account |
2845- Lease
Liabilities due for payment |
7968- currency
exchange losses on lease liabilities |
| Balance before Termination |
-1250 (Cr) |
1000 (Dr) |
-600 (Cr) |
|
|
|
| FAP 81 |
Clear lease
liability balance |
1250 (Dr) |
|
|
|
|
|
| FAP 80 |
|
|
|
-1250 (Cr) |
|
|
| FAP 0 |
Transfer
Acquisition value |
|
-1000 (Cr) |
|
|
|
|
| FAP 0 (New Asset) |
|
1000 (Dr) |
|
|
|
|
| FAP 0 or FAP 82* |
Transfer dep
value |
|
|
600 (Dr) |
|
|
|
| FAP 0 (New Asset) |
|
|
-600 (Cr) |
|
|
|
| FAP 89** |
Currency
difference loss |
|
|
|
|
|
250 (Dr) |
| FAP90** |
|
|
|
-250 (Cr) |
|
|
| FAP 76*** |
Purchase Price |
|
|
|
|
|
|
| FAP 80 |
|
|
|
|
-2200 (Cr) |
|
| FAP 91**** |
Adjustment-
acquisition value |
|
|
|
2200 (Dr) |
|
|
| FAP 92 |
|
700 (Dr) |
|
-700 (Cr) |
|
|
| Balance after Termination |
0 |
1700 (Dr) |
-600 (Cr) |
0 |
-2200 (Cr) |
250 (Dr) |
* FAP 82 posting type is created instead of FAP 0 posting type, if the
Leasing Type is Operating in Lease Accounting Contract/General
tab.
In such instances, the acquisition value of the new asset is adjusted by the
respective amortization amount when transferring the values to the new asset.
** If there is a gain from currency differences, FAP 87 and FAP 88 will be
created.
*** The purchase price to be paid to acquire the asset is
transferred to the same posting type (FAP 76) that is used to account for the
installments due when running the Lease Payable Accounting Proposals.
****The
adjustment- acquisition value is posted according to the posting control set
up.
This could be mapped to a new acquisition account, if required. But,
the
transferred acquisition value from the old asset is always posted to the
account/code parts that have been used for the right-of-use asset. Therefore, it
is recommended to use Move Object on
Lease Accounting Contract page or on
Fixed Asset Object page to transfer the balances to appropriate
accounts/code parts (including the Object Group) before starting the
depreciation on the acquired asset.
- The status of the lease contract is set to Closed and
the status of the connected FA object status is set to Replaced.
Further, the object status of the new object is set to Active.