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.