Indexation Events

Lease administrators and Accountants can enter indexation events to change the indexation level for all activation groups in the contract.

Adding an indexation event creates a new indexation term (added to the Terms & Conditions page). The rate is calculated by dividing the New Index Level by the Current Index Level, and is applied to the total rent amount (including Supplemental and Reduction terms).

Note that after the draft is merged, the schedules for ASC 842 and GASB 87 will not display a green line because differences due to indexation rate changes are considered to be expenses, and the liability schedules are not changed. When a subsequent non-CPI event occurs, any remaining non-lease payment amount is shifted to a payment amount.

If an indexation event needs to be performed on a contract that was activated without a CPI type defined, users can perform a contract change to set the CPI type. Users can also use a contract change to change the CPI type (i.e., Global or Local), as well as the Current Index Level. Note that these changes do not have any financial impact until the next Indexation event is performed.

Note: You cannot enter an indexation event if there is already a draft of the contract open.

To add an indexation event:

  1. Load the contract.
  2. Click Context Menu > Indexation. Enter the following information:
    • Set the Amendment Date to represent the date the amendment took place. Note that this field can be set to any date during the lease term, and does not impact calculations or reporting.
    • The Index Type is set to the value set for the field CPI or Indexation on the contract Accounting page, and cannot be changed. If this field is set to:
      • "CPI Local":
        1. Select the CPI Input Type:
          1. Rate: Enter a new indexation level. The new level is divided by the old level to generate the rate in the Index term and condition.
          2. Percentage: Enter the percentage increase or decrease applied to the rent amount. The percentage is applied to the current indexation level and the rate is calculated for the Index term and condition.
        2. Enter the new index level or a positive or negative percentage value in the field New Index Value.
        3. Select the First Payment Date that will use the new index level. The First Payment Date must occur in a period where no payment, accrual, or depreciation postings have been made.
      • "CPI Global:
        • Set the Reference Date that is used to look up the New Index Value (based on the configured indexation value applicable for that date).
        • Select the First Payment Date that will use the new index value. This date must occur in a period during the lease term where no payment, accrual, or depreciation postings have been made.
    • For ASC 842 or GASB 87 leases, set the Floating Indexation checkbox, if required. When this checkbox is selected, the application does 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.

      Warning: The configuration in the Nakisa AdminConsole determines the default position of this checkbox, in addition to determining whether the checkbox appears in the application. Note that if the checkbox is hidden, the application still uses the configured default position of the checkbox for all indexation events. Contact your system administrator for more information, if required.

    • The Current Index Level displays the value currently being used for the contract, displayed on the contract Accounting page.
    • Click Submit. The draft of the contract is created and loaded automatically.

    Note: The "New Discount Rate" field is not currently used, and is reserved for future use.

  3. The term "Index - CPI & Other" is automatically added to the lease component Terms & Conditions page, and is automatically selected as Likely to Exercise on the activation group Terms & Conditions page. The amount shows the rate, which is the ratio between the current index level and the new index level.
  4. Note that the contract and lease component cannot be modified. Maintain the activation groups, as required.
  5. Assess the activation group.
    1. After clicking Send to Assessment, the Effective Date is automatically set and cannot be changed.
      • When payments are in advance, the Effective Date will be equal to the First Payment Date.
      • When payments are in arrears, the Effective Date will be set to one month prior to the First Payment Date (e.g., if the First Payment Date is June 15th, the Effective Date is set to May 16th).
    2. Modify the Posting Date or Document Date, if required.
    3. Click Submit.
  6. Review the adjustment postings that will be done once the reassessment is complete. Note that for ASC 842 and GASB 87, there are no adjustment postings because changes due to indexation rate changes are considered to be expenses.
  7. The Accountant must click Confirm Classification, even though the selected classification cannot be changed.
  8. Return to the contract. Click Context Menu > Complete Assessment.
    • If users have posted payments, accruals, or asset depreciation in the master version of the contract past the selected First Payment 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.
  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>/

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 Remeasurement, and click Yes to confirm the deletion.

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