Termination Accounting Transaction For Lease Contract is not Balanced
(Doc ID 2619283.1)
Last updated on DECEMBER 11, 2019
Applies to:Oracle Lease and Finance Management - Version 12.1.3 and later
Information in this document applies to any platform.
On : 12.1.3 version, Asset Management
Find that Termination Accounting transaction for lease contract is not balanced and it is short by the accrued income amount.
When a lease contract is terminated which has been through a couple of billing and accrual cycles, the termination accounting transaction creates an entry for Unbilled receivables and Unearned income. At the same time, the accrual process reverses the income up to the termination date. However, the termination accounting entry is short by the accrued income amount.
It happens when contract is terminated in back dates, often the termination are in back dates when order took long to process and Sales Reversals are always backdated
When accrual is reversed to day 1, so shall the unearned income in termination accounting entry. The termination accounting entry should include all the income that was there in the booking entry.
The issue can be reproduced at will with the following steps:
1. Book a Capital Lease (DFL) contract. (preferable in back date to reproduce the issue)
2. Age the contract for couple of months by billing it for 2 months.
3. Run the Accruals for couple of months
4. Create a Termination Quote with Effective Date as Contract Start Date (ie to the beginning of contract)
5. Approve and Complete the Termination Quote so that contract is terminated
6. View the Booking and Termination Accounting entry, you will see it is short by the accrued income amount
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