Entering an Impairment Gain

In standalone and hybrid systems, if the activation group is classified under IFRS 16 or GASB 87, Lease Administrators and Accountants can enter an impairment gain to adjust the amount of the impairment loss that was previously recorded (i.e., this event will not reverse the original impairment event).

Depending on the period in which the impairment gain is registered, the gain can only be as much as the remaining loss amount. The column "Non-Recoverable Impairment Loss" in the All Columns view of the financial schedules shows the loss amount that cannot be recovered by a gain, for each period.

Entering an impairment loss or gain event generates separate terms per accounting standard. If the event is not applicable to a certain classification and/or standard, the term will not be generated for it. For example for an impairment loss, if the activation group is classified as IFRS 16 finance and ASC 842 finance, then two terms are generated. If the activation group is classified as IFRS 16 finance and IAS 17 finance, only one term is generated.

To enter an asset impairment gain (IFRS 16 and GASB 87 only):

  1. Load the activation group.
  2. Click Context Menu > Impairment. Enter the following information:
    • The Impairment Date is automatically set to first day of the first month that does not have any payment, accrual, or depreciation postings. If any event (such as a reassessment, lease modification, or indexation) has been previously performed on the contract, the Impairment Date is set to the first valid date after the event.
    • Set the Reason Code to "Impairment Gain"
    • Enter a Description of the impairment.
    • For each accounting standard:
      • The GBV field shows the closing GBV value from the previous period.
      • By default, the NBV, beginning of period is set to the Closing GBV - Opening AD - Cumulative Impairment Loss from the period of the effective date. Modify this field if required, but note that it cannot be greater than the GBV.
      • The Total Impairment Loss field shows the amount that was calculated by the application for the previous impairment loss event.
      • By default, the Gain Amount field shows the difference between the cumulative impairment loss of the previous period, and the "Non-Recoverable Impairment Loss" amount from the All Columns view of the financial schedules for the selected period. This is the maximum amount that can be recorded. Reduce the amount if required. Note that this field is only available for IFRS 16 and GASB 87.
      • The field NBV, end of period is automatically populated, and cannot be modified.
  3. Click Submit, and confirm that all of the units in the activation group will be retired.
  4. A draft of the contract is created (with a yellow header and "Draft" Version).
  5. Click Terms & Conditions in the left-panel. Note that an Impairment Gain term has been automatically added for IFRS 16 and GASB 87.
  6. The Lease Administrator or Accountant can click Send to Assessment when they are done reviewing the activation group.
    1. The Effective Date is automatically set to the same date as the Impairment Date.
    2. Modify the Posting Date or Document Date, if required. Note that by default, the Document Date is set to the Effective Date.
    3. Click Submit.
  7. Review the adjustment postings that will be done once the reassessment is complete.
  8. The Business Owner or Accountant must assess the activation group, and then click Approve.
  9. The Accountant has to click Confirm Classification.
  10. The Lease Administrator or Accountant has to click Context Menu > Complete Remeasurement to merge the draft version back to the master version.
    • If users have posted payments, accruals, or asset depreciation in the master version of the contract past the selected Effective Date, then the draft cannot be merged back to the master, and a Sync report with the errors is generated. It can be accessed from the Notification Center, or by clicking .
    • In most cases, if there is a conflict between the draft and master versions, the draft will have to be deleted and started again.
  11. In the left-panel, click Unit List. Click to review liability adjustment documents, and asset retirement documents.
  12. Additional steps are required for systems operating in standalone mode to update the adjustment postings.

To delete the draft version:

  1. If the draft version needs to be deleted at any point, open the draft and navigate to the contract.
  2. Click Context Menu > Delete Draft, and click Yes to confirm the deletion.

See also:  

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