ELA: Incorrect Lease Obligation/Interest Accounting Entries When Pay Term Is Amended
(Doc ID 2483084.1)
Last updated on JULY 21, 2020
Applies to:PeopleSoft Enterprise FIN Lease Administration - Version 9.2 and later
Information in this document applies to any platform.
A common business scenario is that a lease is originally signed for a monthly amount, and then additional space is added requiring an amendment to increase the monthly lease payment. The resulting Payment Schedule and Lease Obligation Accounting entries are incorrect when the amendment requires splitting a Base Rent term into multiple date / rate terms.
The problem is that the Lease Obligation amounts do not reduce to zero over the term of the lease.
The expectation is that the Lease Obligation amounts will reduce to zero over the term of the lease.
This issue can be replicated by performing the following steps:
1) Create a lease starting January 1, 2019 with a 48 month term.
2) Create Base Rent Terms - with 4% Int rate for $1,000 per month for the first 24 months, and for $1,100 for the second 24 months.
3) Activate the Lease.
4) Query the Payment Schedule table and validate the Lease Obligation reduces to zero over the life of the lease.
5) In January 1, 2020 – add $500 Per month for the remaining 36 months of the Lease.
6) Activate the Amendment, and Query the Payment Schedule table
There are incorrect Lease Obligation/Interest entries when the Pay Term for a Lease is amended.
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