Lease Administration – the Total Obligation Amount Is Different Than the Cost of the Asset Associated With the Lease
(Doc ID 2629934.1)
Last updated on JUNE 17, 2022
Applies to:PeopleSoft Enterprise FIN Lease Administration - Version 9.2 and later
Information in this document applies to any platform.
After acquiring a business, the total obligation amount is different than the cost of the asset associated with the lease. Is this business requirement supported by PeopleSoft Lease Administration?
The business acquires another business. During purchase price accounting, the GAAP guidance, specifically ASC 805 (business combinations), is to value all assets using a 3rd party valuation company. That company places a value of $50,000 on a piece of equipment that is leased. The total lease payments remaining on the lease are $75,000. In this case, the GAAP guidance results in an obligation greater than the asset value.
Please note that the remaining payments (i.e. obligation) could be less than the asset value.
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