Activation Group Events

Once the activation group has been activated, you can create an activation group-level event to change whether a term is likely to be exercised or not, modify certain activation group or unit fields, or perform events such as indexation, casualties, and asset impairments.

If the activation group is classified under ASC 842, you can also reclassify the activation group if required. If the classification changes, you can track the selected classification per period in the All Columns Schedule.

If all of the documents have been posted up to the ROU End Date in an active activation group, you can perform an activation group event to set "likely to exercise" for a term that starts after the ROU End Date. For more information, refer to Events after ROU End Date.

Note: If the activation group is classified as Provisioning, only Terms and Conditions Reassessment, Indexation, and Casualty events affect the financial schedules for this classification. Note that if there is a secondary accounting standard, all events are still available and these financial schedules are updated as usual.

To enter an activation group-level event:

1. Open the required activation group.
2. Click Event in the activation group header.

   

3. In the Create Event pop-up:
   1. Enter an Event Name.
   2. Select a Modification Date, which is the effective date of the event. Note that regardless of the Payment Timing of any of the terms, the Modification Date is always at the start of the day.

      In most cases, this date must be before or equal to the ROU End Date. To add terms beyond the ROU End Date, refer to Events after ROU End Date.

   3. Select one or more Modification Reason, which changes the input fields in the pop-up:
      • Terms & Conditions Reassessment. This Modification Reason allows you to exercise or unexercise terms, as well as edit certain fields (such as the Salvage Value).
      • Indexation
      • Asset Impairment - Gain
      • Asset Impairment - Loss
      • Decrease in Term
      • Decrease in Asset

      Note: Contract Rate Change and asset-related modification reasons cannot be selected for short term or low value leases, or non-lease service contracts.

      Note: For lessor activation groups, only "Terms & Conditions Reassessment" and "Indexation" are supported.

   4. In the drop-down Use a Revised Discount Rate?, select either "Revise Discount Rate" if you need a rate change, or "Unchanged Discount Rate" to leave the contract rate or IBR unchanged. Note that in the Delta Modification Summary view, changes to the Interest Rate appear in the Classification tab.
   5. Only click Termination Event if you are entering an asset casualty. See Asset Casualties for detailed information about this event.
   6. Click Submit.
4. Make the required changes to the activation group. Note the following: 
   • In Terms and Conditions, terms are split at the Modification Date. The portion of the term prior to the Modification Date cannot be unexercised.
   • If you exercise or unexercise terms, make sure that you also update the ROU End Date on the Definition page. If an Expected GRV term exists, the Payment Date is automatically updated based on the new ROU End Date.
   • If you exercise a Purchase Option or a Termination Option and you already have an Expected GRV exercised, the Expected GRV term is updated so that it is not after the new end date.
   • By default, adding lease end terms (Termination Option, Purchase Option, or Casualty) does not change any of the existing payments on the same day and time.
     • If the "Lease end Term Ignores Payments" setting in Financial Organization Structure is enabled, payments that occur on the same day and time as a lease end term are automatically unselected when the Modification Date is in the same period as one of these lease end terms. If this occurs, there is a warning on the unselected term, and you have the option of reselecting it if required.
   • If you exercise a Purchase Option or select Transfer of Ownership on the activation group Definition page, the ASC 842 classification is automatically set to Finance and cannot be changed.
   • If you exercise a Cash Incentive term, the First Payment Date must match the event Modification Date.
   • If you exercise a term that is indexed, the Base Indexation Rate and Date remains the same as at inception, and is not automatically updated when it is exercised. You can edit these fields if required.
   • If the asset class configuration has "Infinite Useful Life" set to "true" (which is identified on the Classification page), exercising a Purchase Option will stop asset depreciation as of the Modification Date, and vice versa.
5. Click Delta to review all the changes.
6. Click Generate Schedules to view the change in the schedules.
   • If required, you can reclassify activation groups under ASC 842 (between Operating and Finance). The resulting transfer of balance from the previous classification General Ledgers to the new ones are recorded in Reclassification journals.
7. Click Send to Assessment, which will also automatically regenerate the schedules.
8. Click Journals to view the recognition journal entries that will be posted for this event.

9. Click Approve and review the changes in the Event Modifications Summary pop-up. Click Approve Modifications to approve the changes.
   • Send the draft back for changes by clicking Rework.
10. Click Confirm Classification.
11. Click Activate to make this draft the new active version of the activation group, or click Rework to send the draft back for changes.

See also:  

• About Lease Events
• Delete Event Drafts

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