How To Convert An Asset Linked To A Lease From 'Leased' To A Stand-Alone Asset 'Owned'? (Doc ID 2565531.1)

Last updated on FEBRUARY 08, 2024

Applies to:

Goal

The customer has a lease asset that at the end of it's term, the customer decides to purchase the asset.

Questions relating to this scenario:

Q1: How to convert the asset from 'Leased' to 'Owned', once the lease has been purchased?

Q2: Why does the lease has to be terminated and create asset with lease agreed purchase price when the asset is already in the system?

Q3: Why does the lease have to be terminated if it is already at the end of its term?

Q4: Please confirm that all lease related asset needs to be retired after lease expiry, lease termination and on exercise of lease purchase option. On lease renewal, we will continue to use leased assets.

Q5: If we recreate the Asset manually on lease expiry or exercise of purchase option, then it mean liability is booked again on lease creation?

Q6: Do you have any white paper on Lease Assets accounting and treatment on Lease expiry or termination?

Q7: Do we need to follow the steps for both assets, mentioned in A1? If yes, what are the difference between Asset created by Finance Lease and Asset created by Operating Lease?

7A) Terminate the lease
Why do we need to terminate the lease when the lease is going to complete it terms.

7B) Retire the Assets
Why do we need to retire the assets when the same need to be recreated with lease agreed purchase price.

7C) Create New assets.
Why do we need to create asset with lease agreed purchase price when the asset is there in the system.

 

Solution

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