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Expenses from Nakisa Lease Administration

Any lease event in Nakisa Lease Administration that generates a posting that increases or decreases the ROU Asset value is considered a budget expense in Capital Investment Budget. For example, this includes activating a new lease, changing the interest rate, or performing a casualty event.

Note: As an exception to this rule, ROU Asset postings generated in impairment events and during asset retirement when the lease is closed are not considered expenses in Capital Investment Budget.

Note that payment, accrual, and depreciation postings in Nakisa Lease Administration are not treated as expenses because they do not impact the ROU Asset. Additionally, note that short term, low value, and service contracts are not considered as expenses because no assets were created.

The application determines which budget submission to apply to the expense based on the logic described on this page, and only allows the operation to proceed if there is a sufficient budget amount remaining in the submission. If the budget has insufficient amounts, the activation group will fail to activate or lease event will fail in Nakisa Lease Administration and the expense cannot be registered. In this case, you have the option of performing a budget modification to increase the budget amount before re-attempting the operation.

For expenses registered during lease activation, the full Present Value of the lease is expensed towards the budget submission, while for other lease events, the delta ROU Asset amount is registered. Once the amount is booked, the expense line item is displayed per unit on the Expenses tab of the submission and is automatically labeled with the tag "External Post". If multiple terms are exercised at one time (either at inception or through an event) each term is registered in the application as a distinct expense line item.

When an expense is generated from a lease event, the application reserves the budget amount while the expense is being processed by creating a "Reserved" status expense in Capital Investment Budget. Once the event is successfully processed the expense status automatically changes to "Posted". Note that reserved expenses from Nakisa Lease Administration have an expiry date that is set based on your configuration in the Administration section. The Nakisa Lease Administration Schedule Job "Delete Expired Reserved Expense in CIB" runs once a day by default to delete any reserved expenses that have passed their expiry date.

Note that once an Nakisa Lease Administration expense is registered, you cannot remove the budget from the master agreement.

Note: The application only registers Nakisa Lease Administration expense amounts for the main accounting standard (based on your configuration in the Nakisa AdminConsole), and does not register amounts for any secondary or alternative accounting standards.