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Enhancements to Property Manager for Compliance with New Accounting Standards, Releases 12.1.3, 12.2.4 (Doc ID 2319447.1)

Last updated on MARCH 13, 2018

Applies to:

Oracle Property Manager - Version 12.1.3 and later
Information in this document applies to any platform.

Purpose

 This document provides a description of Oracle Property Manager's solution to changes due to the new IFRS 16 and ASC 842(US GAAP). The solution to the new requirements from these accounting standards is planned to be delivered in two phases and this document covers the features/requirements from GAAP changes addressed in phase I.

Phase I focuses on application enhancements for performing all calculations needed for the “Look Back” period (2017-2019). The calculated values are provided to you in the form of three reports; one is a very specific and detailed at the lease level and the other two reports are detailed at the portfolio level. You can use this information to update your financials and for comparative statements.

Phase II: Oracle Property manager will generate accounting for various events in the lifecycle of the lease from the tenant's perspective accounting. Currently, tenant accounting is per the existing compliance needs, with accounting for the expenses and normalizations. Going forward, the tenant accounting will be enhanced to account for the new balance sheet balances, such as Right of Use and Lease Liability, and the new generated expenses from amortization of right of use and liability (interest expense).

Scope

Financial reporting for leasing businesses around the world are going to be impacted as a result of changes to the leasing Accounting Standards under IFRS and US-ASCs (US GAAPs). These new accounting standards will be enforced, starting December 2018 and January 2019 and thus leasing applications like Oracle Property Manager need to prepare for the changes. One of the objectives of these accounting standards is to provide information on Financial Obligations and Rights of tenants by bringing the leases onto the balance sheets of the tenants. This will also ease the comparability of tenants' financial statements and organizations not leasing property but rather acquiring it.

The impacts from the standards can be classified under two categories:

Changes to Lessor Accounting
Changes to Lessee Accounting

Of the two above changes, the changes to Lessee/Tenant Accounting are significant and this document deals with the primary requirements and their solution implemented in Oracle Property Manager. These new standards significantly impact the accounting for lessees for real estate tenants, requiring them to recognize most leases (example: rental contracts) on their balance sheets as lease liabilities with corresponding right-of-use assets.

Users following the “Full Retrospective Method” need comparable financial data prepared, per the new 2017 and 2018 US GAAP standards and 2018's IFRS 16. If you want to comply with the “Modified Retrospective Method” for IFRS, there is no requirement for preparation of comparable financial information. However, for US GAAPs, one year of comparable financial data is needed. The solution provides you with the month beginning and month end balances, starting in January 2017. You can choose the beginning month (adoption month).

Details

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In this Document
Purpose
Scope
Details
 Section 1: Patch Details
 Section 2: Solution Overview
 2.1 Information Needs for Compliance
 2.2 Compliance Reports
 2.3 Calculate Balances
 2.4 Setup Changes
 2.5 Options
 2.6 Recalculations
 2.7 Archival of Data and Calculations
 2.8 Migration and Preparatory Work
 Upgrade Lease API
 2.9 Post Patch Application and Preparatory Work
 2.10 New and Changed APIs
 2.11 Concurrent Programs
 Change Log
References

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