Amortized Liability Balance Method for Lease Liability Reclassification in 24C and Later Releases (Doc ID 3041980.1)

Last updated on AUGUST 20, 2024

Applies to:

Goal

Automatically account for short-term and long-term lease liability. The IFRS 16 and ASC 842 accounting standards require breaking out the lease liability
into short-term and long-term for disclosure reporting.

In addition to the lease liability classification option based on the present value method, Lease Accounting offers an alternate option to classify lease liability
based on the amortized liability balance method. In this method, the long-term liability is calculated by discounting cash flows starting from the 13th month.
The short-term liability is then calculated as the difference between the total discounted lease liability at the current month-end and the long-term liability.

Lease administrators can automatically generate accounting entries to classify the lease liability into short-term and long-term, and account for the periodic
movements from long-term to short-term.

Configure lease system options to use the Amortized Liability Balance method for lease liability classification.

Solution

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