Lease Component Carry-Over Balances

Lessee Carry-Over Balances

When entering contracts that are already in operation into Nakisa Lease Accounting Suite, 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 Accounting Suite. 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 Accounting Suite will calculate the Net Book Value (NBV) that will override the asset value at the cutover date (Jan. 1st, 2019).

If you need to enter a contract that does not have any remaining payments, enter a Lease Asset GBV amount, you have the option of approving the lease component without adding any terms and conditions.

Nakisa Lease Accounting Suite 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.

To enter carry-over balances per unit for lessee contracts:

Open the lease component.
At the top of the contract, navigate to the Carry-Over Balance tab.
The following Carry-Over Balance information is available per standard.:
- Company Asset GBV: Enter the current asset gross book value in the company currency.
- Company Asset AD: Enter the current asset accumulated depreciation value in the company currency.
- Company Current Year AD: Enter the current year asset depreciation value in the company 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.
- Lease Current Year AD: Enter the current year asset depreciation value in the contract currency.

If the contract is operating under ASC 842, select the checkbox Use Straight-Line Depreciation for Operating Leases to change the depreciation method to straight line for ACS 842 operating leases, if required. Note that the other carry-over balance impairment fields cannot be entered for ASC 842 leases.
If the contract has accrued interest balances, enter the amounts in the Accrued Interest Expense fields, depending on the accounting standard. These amounts are used as the opening accrued interest balance in the financial schedules.
If the contract is operating under IFRS 16 and it has undergone an impairment event before you enter it in Nakisa Lease Accounting Suite, you can also enter carry-over balance impairment information:
- Company Impairment Reserve Balance: Enter the current accumulated impairment value in the local currency (i.e., company code currency).
- Company Asset Non-Recoverable Impairment Loss: Enter the Non-Recoverable Impairment loss value in the company currency. Note that the Non-Recoverable Impairment loss must be less than the impairment amount.
- Lease Asset Impairment Reserve Balance: Enter the current accumulated impairment value in the contract currency.
- Lease Asset Non-Recoverable Impairment Loss: Enter the Non-Recoverable Impairment loss value in the contract currency. Note that the Non-Recoverable Impairment loss must be less than the impairment amount.