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Carry-Over Balance

When entering contracts that are already in operation into Nakisa Lease Administration, carry-over balance information can be defined in the lease component. These values can then be modified for each activation group (before they are sent for assessment). This feature is disabled by default. Contact your system administrator to enable it, if required.

To support different transition account methods, there are multiple ways of importing balances into Nakisa Lease Administration. Once you have finished with the calculations for your selected transition accounting method, you may use some or all of the carry-over balance fields.

If the asset and liability values are not equal, you 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. Nakisa Lease Administration 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, you 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 you have not included in your GBV and AD calculations, you have to enter them in the terms and conditions.

In all cases, Nakisa Lease Administration uses the PVMLP as the initial liability.

Additionally, if an impairment occurred before the contract was entered into Nakisa Lease Administration, you can also define impairment carry-over information for these contracts in disconnected and hybrid systems. Note that if impairment carry-over information is entered and the activation group is classified as ASC 842 operating, no additional events (such as reassessments, indexation events, and casualties) can be performed on the contract, other than an impairment gain (if it is also classified under IFRS 16 or GASB 87) or another impairment loss.

Note: Carry-over fields per accounting standard and asset depreciation values for prior and current year can be enabled at the activation group level. Contact your system administrator if you require these fields.

Note that these carry-over balance fields are not available for non-lease service contracts, short term leases, or low value leases. Additionally, note that if carry over balance values are entered, lease events cannot be performed in the first period of the lease.

Note: Asset Capitalization documents for carry-over balance contracts can only be reversed in connected systems with S/4HANA 1809 or later versions.

To enter carry-over balances per unit:

Open the lease component Definition page.
In the Carry-Over Balance per Unit section, enter the following information. Note you must always enter the amounts for both the local and contract currencies. If one of these carry-over fields are set, the GBV fields become mandatory.
- Company Asset GBV: Enter the current asset gross book value in the local currency (i.e., company code currency).
- Company Asset AD: Enter the current asset accumulated depreciation value in the local currency.
- Lease Asset GBV: Enter the current asset gross book value in the contract currency.
- Lease Asset AD: Enter the current asset accumulated depreciation value in the contract currency.
- For contracts operating under ASC 842, IFRS 16, or GASB 87 in disconnected or hybrid systems, users can also enter carry-over balance impairment information. Note that impairment reversals are only available for contracts operating under IFRS 16.
  - Company Asset Acc. Impairment: Enter the current accumulated impairment value in the local currency (i.e., company code currency).
  - Lease Asset Acc. Impairment: Enter the current accumulated impairment value in the contract currency.
  - Company Asset Max. Impairment Reversal - IFRS only: Enter the current maximum impairment reversal value in the local currency. Note that the impairment reversal value must be less than the impairment amount.
  - Lease Asset Max. Impairment Reversal - IFRS only: Enter the current maximum impairment reversal value in the contract currency. Note that the impairment reversal value must be less than the impairment amount.
Note: The GBV amount cannot be less than the sum of the accumulated depreciation and accumulated impairment amounts (if they were entered).

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