The New Leasing Guidance and Its Impact to PeopleSoft...
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Transcript of The New Leasing Guidance and Its Impact to PeopleSoft...
Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |
The New Leasing Guidance and Its Impact to PeopleSoft Asset Management and Lease Administration
Loida Chez Product Management Director PeopleSoft Asset Lifecycle Management Solutions July 19, 2017
Session 101160
Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
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Copyright © 2017, Oracle and/or its affiliates. All rights reserved. |
Agenda
Development Phases
Configuration Considerations
What’s Next?
Q & A
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2
3
4
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Lease Accounting Development Approach Phased Enhancement Rollout (9.2 Only)
Phase 1 – Foundation
Phase 2 – Foundation
Phase 3 – Lessee
Phase 4 – Migration Transition
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Phases 1 and 2
• Financials Audit Framework
• Supplemental Data
• Related Leases and Hierarchy Viewer
• Lease data import
• Accounting hierarchy
• Interunit transfers
• Lease expiration/asset retirement
• Interim rent
Preparing the Foundation for New Leasing Guidance
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• Equipment leasing
• Finance/capital payables leases
• Lease classification assistant
• Enhanced integration with Asset Management
- ChartField transfers
- Recategorization
- Asset cost adjustments
- Asset life update/book change
Non -Exhaustive
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Phase 3
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Payables Lease Extensions for ASC 842 and IFRS 16
• Multi-asset leases • More precise data
capture of financial terms
• Allocation of lease payments
• Asset-level lease classification and accounting
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Financial Terms
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Total Lease Payments = Unpaid Lease Payments + Payments Due at End of Lease ROU Asset Cost = Present Value of Lease Payments + Initial Direct Cost + Prepaids – Lease Incentives Received
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Financial Terms
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New rent types enable more precise data capture of financial terms
• Initial Direct Cost • Lease Incentives • Prepaid Rent
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Financial Terms
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Financial Terms
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Initial direct cost is reflected in the right-of-use asset
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Lease Options
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Related actions to enter lease option payments
• Penalties • Renewal • Purchase
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Lease Options
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• Associate option to an underlying asset in a lease
• Evaluate if purchase option is bargain with percentage of fair value calculation
• Establish if option is reasonably certain to be exercised
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Lease Options
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Options reasonably certain to be exercised are reflected total lease payments and right-of-use asset
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Leased Assets
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• Add new equipment or property asset • Select asset added in Asset Management
prior to lease entry
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Leased Assets
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Leased Assets
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Leased Assets
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Fair value used to determine if purchase option is a bargain
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Leased Assets
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Residual value included in lease liability
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Allocation of Lease Payments
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Lease payment allocation basis • Manual • Percent • Price
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Allocation of Lease Payments
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Lease Classification
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• Lease classification determined by asset
• Classify all assets or one asset at a time
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Lease Classification
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Lease Classification
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Lease Amendments
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Is the amendment the result of lease remeasurement?
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Lease Amendments
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Lease Amendments
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Configuration Considerations Lease Administration – Lease Classification, Borrowing Rate, Miscellaneous Rent, and Lease Options
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Lease Administration Business Unit
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What is Your Organization’s Accounting Policy for Lease Classification?
• If FASB BU, define - ‘major part’ of remaining
economic life of leased asset
- ‘substantially all’ of the fair value of the underlying asset
• Percentage of fair value considered bargain purchase (optional)
• If IFRS BU, all payables leases are finance
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Borrowing Rate Optionally Configure a Default Incremental Borrowing Rate
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Miscellaneous Rent Types Initial Direct Cost, Prepaid Rent, and Miscellaneous Recurring Rent
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New rent type identifier • Initial Direct Cost • Other
If rent type is ‘other’ specify if rent is • Included in lease
payments • Interim or prepaid rent
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Lease Options Renewal, Penalties, and Purchase Options
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Valid option types • Renewal • Purchase • Penalties • Other
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Configuration Considerations Asset Management – Asset Categories and Profiles
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Asset Categories Finance versus Operating
Operating Lease Categories = Non-Depreciable
Finance Lease Categories = Depreciable
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Asset Profiles Finance versus Operating
Operating Lease Profiles = Capitalized Asset
Finance Lease Profiles = Capitalized Asset
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Asset Profiles Finance versus Operating
Operating Lease Profiles = Non-Depreciable
Finance Lease Profiles = Depreciable
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Configuration Considerations Accounting Hierarchy
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Lease Accounting Hierarchy
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AM Accounting Entry Templates
LA Accounting Rules
CF Override
Highest level in default hierarchy
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Asset Management Accounting Entry Templates Evaluate Existing and Create New
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• Review accounting entry templates for existing lease asset categories
• Create new accounting entry templates for new
- Asset categories - Cost types
Lease Incentive Lease Remeasurement Rent Expense
- Lease Expense Transaction Type (LEX)
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Lease Accounting Rules Evaluate Existing and Create New
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• Review existing transaction routing codes and LA accounting rules for existing transaction groups
• Evaluate if new LA accounting rules are needed for new transaction groups
- Lease Obligation - Lease Interest Expense - Prior Period Lease Obligation - Prior Period Interest Expense - Rent Expense - Lease Incentive
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What’s Next?
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Lease Accounting Development Approach Phased Enhancement Rollout (9.2 Only)
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Phase 4 – Migration Transition
Phase 1 – Foundation
Phase 2 – Foundation
Phase 3 – Lessee
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What does all this mean for me?
• Asset Management and Lease Administration Licensed Customers
– No additional licenses needed; additional planned functionality already included
• Asset Management Only Customers – Evaluate your lease portfolio. You may want to consider licensing and implementing
Lease Administration for all asset types (including properties), lessee/lessor, and advanced leasing capabilities
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Q&A
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Key PeopleSoft Information Sources
Get Connected and Stay Informed
www.peoplesoftinfo.com
www.peoplesoftinfo.com www.peoplesoftcfotool.com www.peoplesoftvfos.com
@PeopleSoft_Info Oracle PeopleSoft Development Group
Oracle PeopleSoft Page Blogs
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MW
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