Implementing Lease Accounting
Implementing Lease Accounting
Implementing Lease Accounting
Accounting
22B
Oracle Lease Accounting
Implementing Lease Accounting
22B
F53802-02
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Oracle Lease Accounting
Implementing Lease Accounting
Contents
3 Implementation Tasks 23
Roadmap for Setting Up ............................................................................................................................................................. 23
Set Up Payables Financials Option ........................................................................................................................................... 23
Set Up General Ledger Calendars ............................................................................................................................................ 23
Set Up Payables Suppliers And Sites ....................................................................................................................................... 24
Set Up Document Sequencing .................................................................................................................................................. 24
Set Up Currency Conversions .................................................................................................................................................... 24
Set Up Payment Terms ............................................................................................................................................................... 24
Set Up Inventory Organizations ................................................................................................................................................ 24
Set Up Master Item List .............................................................................................................................................................. 25
Set Up Business Functions ........................................................................................................................................................ 25
Set Up Payables Integration ....................................................................................................................................................... 25
Oracle Lease Accounting
Implementing Lease Accounting
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Oracle Lease Accounting Get Help
Implementing Lease Accounting
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Oracle Lease Accounting Chapter 1
Implementing Lease Accounting Getting Started with Your Lease Accounting
Implementation
Setup Components
The following components are also required to be set up for Lease Accounting:
Payables Integration
You also need to set up Payables Integration, if required.
Subledger Accounting
You need to set up Subledger Accounting for payment accounting.
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Functional Setup Manager (FSM) File Upload
Rapid Implementation
Rapid Implementation
• ORA_FLA_DISCOUNT_INDEX_RATES_csv
• ORA_FLA_DISCOUNT_INDEX_INDEXES_csv
• ORA_FLA_PAYMENT_TEMPLATE_ACCOUNTS_csv
• ORA_FLA_PAYMENT_TEMPLATE_csv
• ORA_FLA_SYSTEM_OPTIONS_csv
You can use the information in these files to upload system options, discount rate indexes, and payment term
templates.
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Note: Even if you are uploading only the system options, the input compressed file must contain all the six files
(five .csv and one .xml).
You can use the same infrastructure to upload multiple objects for setups such as 6 or 10 different discount rate indexes.
You can update the setups by exporting the setup data and then making changes and importing the compressed file.
The setups for the payment increase configuration for CSV file uploads are also available for the following:
• Agreement Templates
• Payment Increase Indexes
System Options
You use the system options to create the business unit for lease creation. It is a prerequisite.
You must provide the following system options information among other attributes:
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• Calendar Name: The name of the GL calendar. You can provide a user-defined calendar like 4-4-5 for deriving
calculations only for daily calculations. You can use your GL calendar for reporting and other General Ledger
activities.
• Item Master Organization Name: The inventory item master identifier. You can use an item from the Item
Master reference for creating the equipment lease's assets.
• Auto Asset Number Flag: The identifier to enable auto-numbering of the asset.
• Auto Lease Number Flag: The identifier to enable auto-numbering of the lease.
• Secondary Ledger Name: The name of the secondary ledger.
Add a secondary ledger only if you need to comply with the secondary accounting standard.
Note: You don't need to choose a secondary ledger if you don't need to report and account in multiple
GAAPs.
Note: You can use only those business units with completed AP Financial options for creating lease accounting
setups.
Note: You can create leases only for those business units defined in the system options setup.
You must provide the following information for discount rate indexes among other attributes:
You can provide multiple discount rates within the same .csv file if the dates don't overlap and are in sequential order.
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• Implement financial policies onto payments consistently
• Drive calculation option of balances for right-of-use, liability, and expenses
• Capture accounts for SLA accounting
• Capture accounts for primary and secondary ledgers accounting
• Capture tax attributes for defaulting onto AP Invoice
You must provide the following information for payment term templates among other attributes:
• Option Flag Display: The identifier to mark the option payment template.
• Option Type Code Display: The type of option.
You must provide the following information from the FLA_LEASE_ACCOUNT_CLASS lookup among other attributes:
• Account Detail Number: The unique account detail number used in the payment term template.
• Account Class Code Display: The account class of the account in this distribution.
• Ledger Name: The GL identifier associated with the payment term template.
• CCID Segment: The identifier of code combination.
Accounting Information
Accounting Classes
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• Accumulated Amortization: Lease Accounting collects the accumulated amortization expense in this account.
You require it for the Lease Expense accounting event.
• Lease Expense: The ASC842 lease expense account. You require it for ASC842.
• Noncompliance Expense: The charge account for the noncompliance expense (no liability or right-of-use
checks). Lease Accounting uses this account on noncompliance invoices on the expense distribution when it
reaches Payables. You require it if the Payables setup doesn't have an 'Expense' account defined in the setup.
• Payables Clearing: For compliance payments, Lease Accounting uses the payables clearing account as an
offset for creating a temporary Payables Liability charge. You require it for the Lease Payments Approval event.
• Payables Liability:You use the payables liability account on the credit side of AP invoice. Lease Accounting
sends this account on the invoices that are sourced from it. If Payables setup doesn't have this account, you
must define this account on the payment.
• Gain/Loss: For all terminations and scope decrease amendments, Lease Accounting calculates the gain or loss
in this account.
• Foreign Exchange Gain/Loss: You use this account during the revision of transactions to reevaluate the right-
of-use for foreign exchange transactions.
Ensure you have the Financial Application Administrator role assigned to you.
Navigate to the Setup and Maintenance page from the My Enterprise menu.
Change the functional area to Financials from the functional area list.
You can set up Lease Accounting using the new user interface for setup under the 'Manage Lease Accounting
Configuration' option.
You can complete the setup required for system options, discount rate indexes, and payment term templates directly
from the Search page.
You can select the following options from the Search Options:
• Search System Options
• Search Discount Rate Indexes
• Search Payment Term Templates
You can also edit, update, and duplicate the setups from the Manage Configuration setup.
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General:
Field Description
The valid options are IFRS16 and ASC842. The accounting for compliance leases and their balances are
generated according to the selected accounting standard.
Secondary Accounting Standard Select the secondary accounting standard, if you require.
You must only select the secondary accounting standard if you need to comply with both standards.
If the primary is IFRS16, the secondary will be ASC842 if both accounting standards are applicable for
reporting and vice versa.
Default Currency Conversion Type Select the default currency conversion type.
Add a secondary ledger only if you need to comply with the secondary accounting standard.
Note: You don't need to choose a secondary ledger if you don't need to report and account in
multiple GAAPs.
Amortizations:
Field Description
Amortization Calculation Frequency Select 'Daily' or 'Periodic' as the calculation frequency of amortizations.
Interest Calculation Method Currently, 'Daily Compound Interest' is the default method.
Numbering:
Field Description
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Field Description
Approvals:
Field Description
Import Preference Select the import preference. You can choose from the following import preferences:
• Auto Approve All Leases: Select to set all the leases to be auto approved for accounting.
• Auto Approve Migrated Leases: Select to set only the migrated leases to be auto approved for
accounting.
• Auto Approve All Leases: Select to set only the nonmigrated leases to be auto approved for
accounting.
• No Auto Approval: Select to set all the imported leases not to be auto approved for accounting.
Payment Processing:
Field Description
Field Description
Effective From Select the effective start date for the index.
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General:
Field Description
Payment Details:
Field Description
• Base Rent
• Cleaning
• Depreciation
• Insurance
• Operating Expense
• Rent
• Percentage
If the template is for a payment, you can choose from the following template types:
• Abatement
• Appliance Rental
• Base Rent
• Common Area Maintenance
• Cleaning
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Field Description
• Deposit
• Depreciation
• Direct
• Escalation
• Payment for Option
If the template is for an option, you can choose from the following template types:
• Allowance
• Construction Warranty
• Expansion
• Holdover
• Purchase
• Renewal
• Early Termination
• Adjustment
• Residual
Accounting:
Field Description
Tax:
Field Description
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Field Description
Distributions:
Field Description
Rapid Implementation
You can set up rapid implementation from the Manage Lease Accounting Configuration page.
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• Select Download-Upload Configuration from the Actions menu.
• Click Download Configuration Template.
• Fill the template with the relevant information for rapid implementation. Refer to the Functional Setup Manager
File Upload section for more information.
• Click Choose File to select the completed template.
• Click Upload to update the setup information.
Lease Accounting also provides rapid implementation for Payment Increase Configuration components.
Manage Features:
Navigate to the FSM page using My Enterprise > Setup and Maintenance.
Create Property and Equipment Lease You can enable this feature to create and maintain property and equipment leases in Lease
Accounting.
Lease Contract Activation You can enable this feature to activate lease contracts in Lease Accounting.
Lease Amendments for Scope Increases You can enable this feature to include scope increase for lease amendments in Lease Accounting.
Lease Amendments for Scope Decreases You can enable this feature to include scope decrease for lease amendments in Lease Accounting.
Asset End Dates and Options You can enable this feature to create options and include asset end dates for leases in Lease
Accounting.
Lease Contract Import and Conversion You can enable this feature to import and convert lease contracts in Lease Accounting.
Lease Payment Processing You can enable this feature to allow payment processing for leases in Lease Accounting.
End of Lease Processing You can enable this feature to allow termination of leases in Lease Accounting.
Rapid Implementation for Lease You can enable this feature to allow rapid implementation of setup features in Lease Accounting.
Accounting
Lease Disclosure and Transaction Reports You can enable this feature to create the lease disclosure and transaction reports in Lease Accounting.
Lease Payment Updates You can enable this feature to allow updates to payments for leases in Lease Accounting.
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Fixed Rent Increases You can enable this feature to allow fixed rent increase for payments in Lease Accounting.
Note: All features are a "Customer Must Take Action before Use by End Users," which means it's delivered disabled,
and you must use the opt-in method to enable the feature.
Tasks Description
Manage Lease Accounting Configuration Manage Lease Accounting Configuration task is predefined for the setups.
Manage Payment Increase Configuration You can search for the Manage Payment Increase Configuration task using the Search Tasks option.
Field Description
Agreement Template Name The search is based on the agreement template name.
Default Relation Type The search is based on the default relation type.
Payment Basis Type The search is based on the payment basis type.
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Field Description
Index Short Name The search is based on the index short name.
2. Click Search.
3. The results are displayed in the Agreement Templates Display section of the Manage Payment Increase
Configuration page.
4. Click the agreement template to open the template details.
5. Click Save to retain the search information.
6. If needed, you can use Reset to clear the search information.
7. Use Advanced Search to deep search for agreement template information.
1. Click New (+) to display the Create Payment Increase Agreement Template page.
2. The following fields are available as part of the Payment Increase Agreement Template creation:
Field Description
◦ Base Rent
◦ Cleaning
◦ Depreciation
◦ Insurance
◦ Operating Expense
◦ Rent
◦ Percentage
◦ Allowance
◦ Purchase
User Responsible Select the user responsible for the creation of the template.
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Field Description
Status Select the status of the template. You can make the template active and enable it for the
creation of the payment increase agreement.
Field Description
Payment Basis Type Select the payment basis type for the template.
Default Relation Type Select the default relation type for the template.
◦ Fixed
◦ Index
Basis Adjustment Factor Enter a default basis adjustment factor for the template.
Assess in Years Enter the default assessment in years period for the template.
Basis Compounding Select whether you want basis compounding for the template or not.
Payment Increase Rounding Select whether the payment increase rounding should be in Tens or Ones for the template.
Field Description
Fixed Increase Percentage Enter a default fixed percentage for the template.
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Field Description
Fixed Increase Amount Enter a default fixed amount for the template.
If you have selected Index, Lesser of Index or Fixed, or Greater of Index or Fixed option as the default relation
type, then this section is displayed.
Field Description
Index Short Name Select the index short name for the template.
Minimum Increase Percentage Enter the minimum increase percentage for the template.
Maximum Increase Percentage Enter the maximum increase percentage for the template.
Treatment of Unused Increase Select the treatment option for the unused increase.
Missing Index During Assessment Select whether there should be no derivation or a fixed percentage for missing indexes during
assessment.
Missing Index During Activation Select whether there should be no derivation or a fixed percentage for missing indexes during
activation.
Field Description
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Field Description
Index Short Name The search is based on the index short name.
2. Click Search.
3. The results are displayed in the Search Payment Increase Indexes section of the Manage Payment Increase
Configuration page.
4. Click the index short name to open the index details.
5. Click Save to retain the search information.
6. If needed, you can use Reset to clear the search information.
7. Use Advanced Search to deep search for information on payment increase indexes.
1. Click New (+) to display the Create Payment Increase Index page.
2. The following fields are available as part of the Payment Increase Index creation:
Field Description
Descriptive Flexfields
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The following descriptive flexfields are added:
• Navigate to the Setup and Maintenance page from the Settings and Action menu.
• Change the functional area to Financials from the functional area list.
• Click Lease Accounting.
• You can set up Lease Accounting using the new user interface for setup under the 'Manage Lease Accounting
Configuration' option.
• Search for the flexfields in the Tasks search.
• Select any flexfield and run a blank search.
• Select any row and perform Edit.
• Click Manage Contexts.
• Click Add to add a new context. You can add context information, context-sensitive segments, and validators as
required.
• Click Save and Close.
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Oracle Lease Accounting Chapter 2
Implementing Lease Accounting Security - Job Roles, Duties, and Privileges
Create Data Security Policy using Tools > Security > Roles
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Implementing Lease Accounting Security - Job Roles, Duties, and Privileges
Manage Duties
A new duty called Lease Contract Duty is seeded for Lease Accounting.
The duty needs to be assigned to the user who had been created by the implementor for carrying out lease duties of
lease creation and amortization generation.
The Financial Application Administrator has been enhanced with the privilege to add Lease Accounting setups through
FSM.
You can access the Create Property and Equipment Leases functionality using the Lease Contract duty.
You must create a new job role, "Manage Lease Contract," using this duty.
Manage Lease Configuration FLA_MANAGE_CONFIGURATION Allows viewing and configuration Financial Application Administrator
of lease setups.
Manage Lease Contract FLA_MANAGE_CONTRACT Allows viewing and configuration Lease Contract Duty
of lease setups.
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Ensure that ORA_FLA_LEASE_CONTRACT_DUTY_OBI is also added to your role. This generates the Lease Details
Report and moves the version status to Finalized.
Note: The lookup ORA_FLA_OPTIN_OPTIONS has all the lookup values enabled for the Attach Lease Detail Report
button to appear on the screen.
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Oracle Lease Accounting Chapter 3
Implementing Lease Accounting Implementation Tasks
3 Implementation Tasks
This can be completed from the Manage Common Options for Payables and Procurement setups in Implementing
Payables Invoice to Pay, Oracle Financials Cloud for your business unit.
For daily calculations, set up the GL calendar as per your business needs such as 4-4-5.
You can set up a daily calendar only for calculations and follow the GL calendar for reporting and transaction creation.
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Implementing Lease Accounting Implementation Tasks
You will need the Procurement Buyer role for assigning the suppliers and sites to your business units.
You can set up document sequencing through Task > Manage Document Sequences and completing the following
steps:
• Create a new sequence.
• Associate the new sequence to 'Lease Accounting Lease Sequence Category.'
• Associate the new sequence to the business unit.
Defining items in the Master Item list of the Inventory Organization saves your time as it can be quickly referenced for
attributes like Item category, Fixed Assets category, and such. You can add an existing inventory organization to your
business unit or create one and add it to your business unit.
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A master item list provides a list of inventory items for the asset allocated to a lease. These are classified as equipment
assets.
You can set up business functions for any business unit using the Organization Structures functional area and selecting
Lease Accounting under the Assign Business Unit Business Function task.
You must provide the necessary data access and business unit access to the roles created for managing leasing data.
You may need to additionally provide Payables roles if your user also desires to launch Payables Invoices generation
from Lease Accounting.
All subledger components seeded as part of Lease Accounting are added to the accounting method: 'Standard Accrual.'
If you're using any custom accounting method, then you will need to add the Accounting Event Classes such as Lease
Booking, Lease Expense, Lease Revision, Lease Pay Approval, and Lease Termination along with their relevant Journal
Entry rule sets.
You can add these components from the Task: Manage Accounting Methods. After adding these subledger
components, run the ESS: Update Subledger Accounting Options for the changes to take effect.
You can duplicate the seeded components and change the default accounts and such.
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