Lease Component Carry-Over Balances

The Carry-Over Balances page is used for different purposes for lessee and lessor contracts. The following sections outline the different purposes and fields of the page.

Lessee Carry-Over Balances

When entering contracts that are already in operation into Nakisa Lease Administration, you can define carry-over balance information in the lease component. These values can then be modified for each activation group (before they are sent for assessment).

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.

In lessee contracts, 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.

Note that these carry-over balance fields are not available for non-lease service contracts, short term leases or low value leases.

Lessor Carry-Over Balances

With operating lessor contracts, you must define the Gross Book Value (GBV) on the Definition page or Accumulated Depreciation (AD) on the Carry-Over Balances page in the lease component. You can also modify the AD value for each activation group before they are sent for assessment.

Accumulated Depreciation can be entered separately for IFRS 16 and ASC 842,whereas GBV is treated uniformly across both standards. These value are used in the Asset section of the operating lease schedule.

Note that for operating lease, Accrued Rent Clearing / Deferred Lease Clearing and Carrying Amount of Net Investment are not relevant, and therefore any values entered will not have any impact on the financial schedules.

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