Lease Accounting Standard

Follow this general workflow for setting up and using the options related to lease accounting standards (such as ASC 842/IFRS 16). For specific steps, review the content for the page.

Set Up

When setting up Property Lease Management, ensure you complete the following setup: 

1. On the Lease Accounting Standard FastTab of the PLM Property Lease Management Setup page set up the default values.
   Note: Throughout the documentation, the general term Lease accounting standard will be used in place of the specific lease accounting standard name (e.g., ASC 842/IFRS 16).
2. On the PLM Charges page, ensure that Lease Component is set to Yes, and then set up the default accounts on the Lease Components Revenue/Expense FastTab.

Create an Expense Lease

When creating an expense lease on PLM Lease page, ensure to include the following with the other steps for creating a lease: 

1. In the header, set the Lease Type to Expense and then select the additional type (financial, operating, short-term, or non-lease).
2. On the PLM Lease Charges page, select Charge Details > Charges Components to review the lease component accounts for the charge. The default accounts are based on the setup.
3. Next, open the Charge Details page and select Accounting Standard.
4. On the Expense Lease: Accounting Standard page, you can specify any direct costs or incentives, change some of the header values, and review various details of the lease including the amortization schedule.
   1. Enable Create General Journal to determine whether the Invoice Creator will create invoices or journal entries for each billing period. When enabled, transactions will be processed as journal entries only. If disabled, the transactions will be processed as invoice documents. This option can be updated at any time during the lease's lifecycle. It is only available for Expense leases.

When you are ready, you can create the initial journal entry. After the initial journal entry is created and if any changes are made to the lease, you can remeasure the lease.

5. Use the PLM Invoice Creator to create the invoices for the lease.

Create a Revenue Lease

When creating a revenue lease on PLM Leasepage, ensure to include the following with the other steps for creating a lease: 

1. In the header, set the Lease Type to Revenue and then select the additional type: Sales type lease, Direct financing lease, Operating lease, or Exempt lease.
2. On the PLM Lease Charges page, select Charge Details > Charges Components to review the lease component accounts for the charge. The default accounts are based on the setup.
3. Next, open the Charge Details page and select Accounting Standard.
4. On the Revenue Lease: Accounting Standard page, you can specify any direct costs or incentives, change some of the header values, and review various details of the lease including the amortization schedule.

When you are ready, you can create the initial journal entry. After the initial journal entry is created and if any changes are made to the lease, you can remeasure the lease.

5. Use the PLM Invoice Creator to create the invoices for the lease.