About Lease End

Once all payments and accruals have been posted under all valid accounting standards for an activation group, Lease Administrators and Accountants can trigger the lease end process. The Activation Group Status changes from "Active" to "Lease End". Users must then update the End Date for all units in the activation group, and once the current date is past the End Date, users can then close the activation group.

Closing the activation group changes the unit status and the Activation Group Status to "Closed", and retires the asset in SAP. The End Date is then used as the asset retirement date in SAP, which is then displayed in the "SAP Retirement Date" field. Note that asset retirement values are sent in company code currency.

When the application is operating in standalone or hybrid mode, the Asset Retirement documents retire the outstanding gross book value of the asset (indicated in the Asset Transition View of the financial schedules) in all available currencies. In the rare case that group currency amounts in the Asset Retirement document are unbalanced due to rounding (with the GBV greater than the accumulated depreciation), the application sums the difference in a new Gain/Loss line item.

The application verifies if there are any outstanding balances in the liability accounts and accrued interest, and informs the user. If the balances are not 0, the application generates Ledger Closing documents with the outstanding balances by default.

Note: By default, when the activation group is closed the application generates Ledger Closing documents at the activation group level, with the Profit Center and Cost Center information that was set at the activation group level (and not the ones set at the unit level). The one ledger document is then linked to each unit in the activation group, with the amount showing the sum of all remaining balances for all units. Note that if Cost Center Allocation Rules were defined, they are not used for the Ledger Closing documents.

If there was a Purchase Option term in the activation group, the asset is transferred from ROU to owned. This transfer creates a new asset in SAP, and uses the entered End Date as the asset capitalization date. Note that if the application is connected to SAP ECC6 with Classic Accounting, SAP does not transfer asset values for IFRS.

Warning: In SAP S/4 HANA 2021 connected systems, if contracts have carry-over balances entered in the same calendar year as an exercised Purchase Option term, you must run depreciation in SAP before closing the contract.

When all of the activation groups have been closed in the contract, the contract is automatically closed and the Contract Phase and Contract Status both change to "Closed". Once all of the contracts in a master agreement have been closed, the master agreement is also automatically closed, with the Master Agreement Status also changing to "Closed".

Note: If the system is operating in standalone or hybrid mode, or if the Document Date is before the configured SAP Posting Start Date, additional steps may be required to retire the asset in the ERP system. See Updating Internal Posting Statuses with Excel for more information. Alternatively, contact your system administrator to configure the SAP Posting Bot, which will regularly transfer internally generated documents (that are after the SAP Posting Start Date) to the ERP.

To trigger the lease end and close processes:

  1. Load the activation group.
  2. If all payments and accruals have been posted for all of the supported accounting standards, the Lease End button at the top of the contract will become enabled.
  3. Click Lease End at the top of the page.
  4. Click Unit List in the left-panel.
  5. Enter the End Date of the units. This date must be on or after the ROU End Date, and can only be set to a date that is in the past.
    • To set the End Date per unit, click to edit the unit.
      1. Enter the End Date for all of the units in the activation group.
      2. Click Submit.
    • To set the End Date for all units in the activation group:
      1. Click Context Menu > Set End Date. Note that this option only sets the date for units that do not currently have the End Date field set.
      2. Select the date and click Submit.
  6. Click Close at the top of the page.

    Note: The Close button will only become enabled once the current date passes the End Date.

  7. The application displays the remaining balances for liability and accrued interest.

    If there are remaining balances, the application will post the amounts to the configured Gain/Loss Disposal account: 

    1. Enter the Posting Date and Document Date. Note that the Posting Date cannot be in the future.
    2. Click Confirm to close the activation group and retire the assets.
  8. If the asset retirement or asset transfer failed in SAP, click the Reclose button to attempt to close the activation group again.
  9. If the system is in standalone or hybrid mode, one of the following options are available to complete the posting process: 

    • Update the status from "Posted (Internal)" to "Posted" via transaction Excel imports and exports.
    • If an SAP Posting Bot is configured to run with the application, it will regularly transfer internal documents to SAP. The status changes from "Posted (Internal)" to "Posting (External)".
      • If the posting to SAP is successful, the status then changes to "Posted (External)".
      • If the posting to SAP fails, the status changes to "Failed (External)". The next time the posting bot runs, it will pick up the failed postings to reattempt the posting. If required, click Reverse to reverse the internally generated document (e.g., if the GL account configuration needs to be changed).

      Note: For details about documents posted by the SAP Posting Bot, copy the Document number and enter it in the following URL (where <hostname> is the Web server name of your current Nakisa Lease Administration instance):

      https://<hostname>/leasing/app/proxy/jebot/report/<document-number>/

  10. To view asset retirement details:
    1. Click Unit List in the left-panel.
    2. Click in the Asset Number field and select an asset retirement document in the drop-down. Debit and Credit line items for the asset capitalization are displayed at the bottom.

      Note: If the application is connected to SAP and assets are maintained in FI-AA, the line items are retrieved from SAP. If the application is posting internally (i.e., the system is in standalone or hybrid mode, or the Document Date is before the configured posting date), the application uses the GL accounts configured for the asset.

Nakisa Lease Administration 2022.R2-SP © 2023

 

 

Nakisa Inc. All rights reserved worldwide.