Accounting Settings

This page contains the application-wide settings that pertain to Accounting fields or events in the lease.

To configure the accounting settings:

  1. Click Application Menu > Settings.
  2. In the left-menu, click Accounting Settings under Settings.
  3. Configure settings or enable or disable the switches as needed.
  4. Click Save.

The following accounting settings are available:

Setting Description

Calendar Year Range

Define how many years back the calendar pickers will show when users select a date for the Reception Date, all postings, and the Effective Date for all events. Users cannot enter dates that are older than the configured starting year.

Enter a negative value (indicating how many years back should be displayed in calendar pickers), or enter 0 to indicate that the calendar year range starts with the current year. By default, this field is set to -1.

Activation/Effective Date Range

Define the last month available in the calendar pickers when users select an Activation Date at inception. This also applies to the Effective Date (as well as the dates that automatically set the Effective Date) for all lease events. Users cannot enter dates that are after the configured ending month.

Enter a positive value (indicating how many future months should be displayed in calendar pickers), or enter 0 to indicate that the range ends with the current month. By default, this field is set to 1200.

Show/Hide Contract Lease Determination

To hide the entire Lease Determination questionnaire, disable the switch. It is enabled by default.

Contract Lease Determination Required

By default, the Lease Determination questionnaire must be filled out to be able to add a lease component. If you would like to keep the questionnaire but make it optional, disable the switch. It is enabled by default.

Default Lease Type

If the Lease Determination questionnaire is disabled, the default value for the Lease Type field (on the contract Definition page) must be configured in this setting. Note that the valid values are 01-06, and they are defined in the Lease Type table in the Master Data Config.

Enable Lease Component/Activation Group Carryover Balance

To enable the Carry-Over Balance per Unit section on the lease component Definition page and on the activation group Classification page, enable the switch. It is disabled by default.

To support different transition account methods, there are multiple ways of importing balances into the application.

Once users have finished with the calculations for their selected transition accounting method, they may use some or all of the carry-over balance fields.

If the asset and liability values are not equal, they can enter the gross book value (GBV) and asset depreciation value (AD) for the asset at the date the contract is entered into the application. The application will calculate the net book value (NBV) that will override the asset value at the cutover date (Jan. 1st, 2019).

If the asset and liability values are equal, users do not need to enter any carry-over balance values. The application will use the calculated PVMLP value for the initial liability. In this scenario, if there are any IDCs, prepaid amounts, or incentives that they have not included in the GBV and AD calculations, they have to enter them in the terms and conditions.

Enable Activation Group Carryover Balance per Accounting Standard

If enabled, users can enter carry-over balances in the activation group per accounting standard, and also enter prior year and current year accumulated depreciation amounts.

When the Capitalization Date is not in the same year as the Transfer Date from SAP:

  • If the prior year Accumulated Deprecation is set, then the application sends it.
  • The application sends the Asset GBV.
  • If Lease Current Year AD is set and:
    • the lease is finance, then the application sends the value to each depreciation area for the accounting standard with Currency Type 10.
    • the lease is ASC 842 operating, then the application sends the value as Unplanned Deprecation.

When the Capitalization Date is in the same year as the Transfer date:

  • If a prior year Accumulated Depreciation is entered, the application throws an error message.
  • If no prior year Accumulated Depreciation is set, the application sends the Asset GBV value.
  • If the Current Year AD is set and:
    • the lease is finance, then the application sends the Current Year AD value.
    • the lease is ASC 842 Operating, then the application sends the Current Year AD value as the Unplanned Deprecation for each depreciation area for that accounting standard with Currency Type 10.

The settings "Operating Unplanned Depreciation TTYP" and "Current Year GBV TTYP" in backend configuration should also be configured when this switch is enabled. Contact your implementation partner to configure these fields.

Note: This switch can only be used if "Enable Lease Component/Activation Group Carryover Balance" is also enabled.

Use Asset Class for Account Determination

By default, Accounting Determination configuration is based on accounting standard, lease type, and classification type. If the switch is enabled, the application uses the external asset class field as a filtering field. This switch is disabled by default.

Use Asset Class for Non Lease Account Determination

By default, Non Lease Accounting Determination configuration is based on accounting standard, lease type, and classification type. If the switch is enabled, the application uses the external asset class field (i.e., the Asset Class ID in the Asset Class table) as a filtering field. This switch is disabled by default.

Use Asset Class for Asset Account Determination

By default, Asset Accounting Determination configuration is based on accounting standard, lease type, and classification type. If the switch is enabled, the application uses the external asset class field (i.e., the Asset Class ID in the Asset Class table) as a filtering field. This switch is disabled by default.

Use Asset Class for IBR Determination

By default, Incremental Borrowing Rate configuration is based on the lease length and validity period. If this switch is enabled, the application uses the external asset class field (i.e., the Asset Class ID in the Asset Class table) as a filtering field. This switch is disabled by default.

Enable CPI/Indexation

Enable or disable CPI/indexation fields and Indexation events. When enabled, the rate can either be set manually by users, or populated directly from the Indexation table. Note that indexation must be done via an indexation event (and does not happen automatically simply because there is a value in the "Current Index Level" field). This switch is enabled by default.

If the switch is re-enabled, please ensure the following configuration is also complete:

  • Configure the Indexation table in the Master Data Configuration, if required. In the contract, the option "CPI Global" from the Consumer Price Index table is replaced by the valid record from the Indexation table, which then automatically sets the "Current Index Level" in the contract.
  • Configure the GL account for CPI Index in the Non Lease Accounting Determination table in the Master Data Configuration.

Enable Same Payment Frequency for Terms

By default, the application forces many terms and conditions to use the same Payment Frequency that was defined for the first base rent term. The switch is enabled by default.

Disable the switch to allow different Payment Frequencies to be selected.

360 Convention

Configure whether the "360 Convention" checkbox on the Contract Accounting page should be selected or unchecked by default when a contract is created. By default, it is unchecked.

Show/Hide ROU Asset Decrease Amount

For Lease Modification - Decrease Lease Term events, the manual setting of the ROU Asset Decrease Amount (IFRS) is enabled by default. Note that users have to manually calculate the ROU asset decrease amount.

If this setting is disabled, the application gets the value from the internal depreciation table. For finance leases, the application calculates straight line depreciation. If the depreciation in SAP follows another method does not match the depreciation in the application, this switch should not be disabled.

Asset Replacement

Enable or disable the Asset Replacement feature. When enabled, the “Replace Asset” event is available in the activation group Context menu. The application will create a new asset, and link it to the existing unit in the activation group.Note that both the new asset and the replaced asset must have the same Asset Class.

This switch is disabled by default.

Enable Interest Rate for Lease Modification

By default, users cannot modify the interest rate when they perform a lease modification with the reason code "Add a New Lease Component". The application uses the current Contract Rate or IBR the new lease component.

Enable the switch to allow users to specify a different interest rate for the new lease component.

Set "Modify Contract Rate" by Default

The "Modify Contract Rate" checkbox enables the Contract Rate field and allows you to enter a new contract rate during lease events. This checkbox is selected by default in the lease modification event pop-up. Disable the switch to have the checkbox unselected by default during lease modifications. Note that this switch does not affect the other lease events.

Enable Useful Life Edit

Enable the switch to allow users to modify the Useful Life on the lease component Definition page, instead of always using the configured value for the asset class.

The switch is disabled by default.

Enable/Disable Automatic IBR Selection

By default, this switch is enabled, and the application uses an IBR rate when the Contract Rate is 0.

If the switch is disabled, users can select per contract if they want to use contract rate 0 or the IBR rate. When the Contract Rate is 0, a "Use IBR" checkbox appears, and they can select which rate to use.

Enable Impairment Event

By default, the Impairment event is enabled in the activation group context menu. Disable the switch to hide asset impairment.

Note that regardless of the position of this switch, users can still enter carry-over impairment information at contract inception (if carry-over balances are enabled).

Note: Asset impairment is currently only supported for ASC 842, IFRS 16, and GASB 87 and only for systems operating in standalone or hybrid mode.

Disable Financial Impact Draft Check

By default, in most cases, users cannot merge a draft during a lease modification or reassessment event when the changes have no financial impact. Enable the switch to allow users to approve and merge a draft with no financial impact.

Set "End of Month Payment" by Default

When payments are on the last day of a short month (e.g., February 28 or April 30), the checkbox "End of Month Payment" appears in Base Rent terms. If the checkbox is selected, all subsequent payments are on the last day of the month. If the checkbox is unselected, all subsequent payments are on the same day of the month (e.g., every 28th of the month).

Enable this switch to have the checkbox selected by default when a Base Rent term is first added. This switch is enabled by default.

Start Date to use "End of Month Payment" in Terms and Schedules (YYYY-MM-DD)

The "End of Month Payment" checkbox was added in 4.0.3 P13.

For contracts created before the introduction of this checkbox, the behavior of payments on the last day of a short month (e.g., February 28, April 30) remains unchanged: arrears payments occur on the last day of subsequent months, while advance payments occur on the selected day of the month.

For contracts created after this checkbox was introduced, users have the option of selecting the desired payment date behavior.

This date field is used to identify the cut-off between the old contracts and the new contracts. Set this date field to be one day after the date that 4.0.3 P13 was deployed into the production environment. (If this support patch was skipped, use the relevant date for the first build deployed greater than 4.0.3 P13). The application compares the contract creation date with this configured date to determine which behavior to apply.

Warning: Enter the correct date, otherwise existing schedules may become corrupted.

Read-Only Payment Dates in AG Terms & Conditions By default, payment dates in the activation group Terms & Conditions are editable before the activation group is sent to assessment. Enable the switch to make the payment date fields read-only.

Enable Intercompany Lease Transfer

By default, Intercompany Transfer events are disabled. Enable this switch to enable intercompany transfers for standalone and hybrid systems.

You must also configure a GL account for "Intercompany (payable)/receivable" in the Accounting Determination table in Master Data Configuration.

You must also configure the following configuration tables in Master Data Configuration: 

Display Floating Indexation Checkbox

By default, this switch is enabled and the Floating Indexation checkbox is displayed for ASC 842 and GASB 87 leases during indexation events and CPI Global batches, as well as in indexation terms. Disable the switch to hide the checkbox in the application.

Note that if this switch is disabled, the checkbox also disappears from any existing indexation terms for ASC 842 and GASB 87 leases created after the checkbox was introduced. To determine the setting of the checkbox for a particular contract, enable the switch and check the term before disabling the switch again.

Warning: If this switch is disabled, the application still uses the value set for "Floating Indexation Default Position" for all indexation events and CPI Global batches. The checkbox should only be hidden if one method is always used.

Floating Indexation Default Position

When the Floating Indexation checkbox is selected in an indexation event or CPI Global batch, the application will not capitalize index payments for ASC 842 and GASB 87 leases. If the checkbox is unselected, the index payments for ASC 842 and GASB 87 leases are capitalized in subsequent events that change the ROU asset value.

Enable this switch to select the Floating Indexation checkbox by default in all Indexation events and CPI Global batches. By default, this switch is disabled and indexation events are not floating.

Create Ledger Closing Documents per Unit

This switch is disabled by default and Ledger Closing documents (generated if there are remaining balances when the activation group is closed) contain the cumulative remaining balance of all units under the activation group, with the same posting document displayed under each unit.

When the switch is enabled, Ledger Closing documents are generated per unit, with unique unit documents that display the remaining balance of the respective unit. These documents use information from the unit level (instead of the activation group level), such as the unit cost objects.

Always Create Ledger Closing Document This switch is enabled by default and Ledger Closing documents are always generated if there are remaining balances when the activation group is closed. When the switch is disabled, a checkbox appears in the Remaining Balance pop-up and in Close action workflow batches that allows users to determine whether to generate Ledger Closing documents if there are remaining balances. This checkbox is unselected by default (i.e., the documents are not generated).
Set "Apply Earlier Indexation" by Default

The "Apply Earlier Indexation" checkbox applies to newly exercised Extension terms if an indexation event has been previously performed on the contract. If the checkbox is selected, the indexation rate is also applied to the Extension term.

Enable this switch to select this checkbox by default in newly created or copied Extension terms. This switch is disabled by default.

Set "Use User Terms & Conditions" by Default

The checkbox Use User Terms & Conditions is displayed in Send to Assessment and One-Step Approval workflow batches in Batch Management. By default the checkbox is unselected and the application automatically selects all of the available Terms and Conditions before sending the activation group to assessment. If the checkbox is selected, the applicaiton only keeps the Terms and Conditions that are currently selected in the activation groups.

Enable the switch to have the checkbox selected by default in newly created workflow batches in Batch Management. This switch is disabled by default.

Disable Lease End Date Vaidations

If this switch is enabled, the validations on the End Date field and the Posting Date field in the Remaining Balance pop-up during the lease end process are disabled, allowing users to enter any date. By default, this switch is disabled and the field validations are present.

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