E1: 15: Lease Accounting: Enhancement to Add Functionality to Add Inital Direct Costs to ROUA After Lease Commencement
(Doc ID 2550933.1)
Last updated on AUGUST 04, 2021
Applies to:JD Edwards EnterpriseOne Real Estate Management - Version 9.2 and later
Information in this document applies to any platform.
It is common business practice that lease initial direct costs may not be known for several months after the lease has commenced. The existing JDE lessee accounting functionality currently does not have any ability to add initial direct costs to the ROUA schedule only after the lease has commenced amortization so we are requesting an enhancement to the functionality.
There is a requirement to be able to add initial costs to the ROUA schedule ONLY (no lease liability change) and amortize these additional costs over the remaining life of the ROUA schedule (until the ROUA end date). These costs could be significant and material but presently the ROUA schedule cannot be updated unless there is also a calculated change to the lease liability amount (remeasure flag only set on if LL change) and manual billing transactions are ignored if an amortization schedule already exists for the lease.
The common business practice would be:
1. Create the lessee accounting lease and add recurring billing and set lease status to 10
2. Add any known initial direct costs via manual billing
3. Create the amortization schedules and lease commencement journals
4. Begin the monthly balance sheet amortization entries (usually this will go several months past the lease commencement)
5. Attempt to add additional initial direct costs (several months after lease commencement) that were not known at the time of lease commencement impacting the ROUA schedule ONLY to adjust the future amortization to include the new initial direct costs.
Currently ROUA cannot be adjusted if there is no change to the lease liability amount. Even if there is a change to the lease liability amount and a remeasure is triggered, when entering manual billing the user is advised that the manual billing amount will not be added to ROUA due to the existence of the amortization schedules for the lease.
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