ELA: Incorrect Lease Term Calculation. How Is the LEASE_TERM Calculated and Why It Doesn’t Match the ASSET_LIFE? (Doc ID 2829449.1)

Last updated on APRIL 04, 2025

Applies to:

Symptoms

Incorrect Lease Term Calculation
How is the LEASE_TERM calculated and why it doesn't match the ASSET_LIFE?


The issue can be reproduced at will with the following steps:

1. Navigate to Lease Administration > Payables Leases > Create New Payables Lease and add a New Lease
2. Fill in the Lease Commencement and Termination Dates and review the calculated Lease Term
3. On the same page, select Add Equipment or Add Property and hit the Go Button
4. Review the calculated Lease Asset "*Estimated Life" on the "Add Asset" Popup Page.

We have the following examples:

For a Lease with Start Date(Commencement) = 2021-01-15 and Lease End Date(Termination) = 2024-01-14 we get:
 > LEASE_TERM(Lease Term) = 35
 > ASSET_LIFE(Estimated Life) = 37
While the actual Asset/Lease Life would be 36 months/periods.
36 periods would be expected because the difference between the two dates is exactly 3 years (36 months).

The calculation of 35 full periods for 2021-01-15 to 2024-01-14 is incorrect because it doesn't take into account the date of 2024-01-14 even though it is still a valid date of the lease.
When calculating the same for 2021-01-01 to 2023-12-31, the last day is taken into consideration. Thus the 36 periods.

For simplification purposes, we can consider the case in the same year with Start Date(Commencement) = 2021-01-15 and the Lease End Date(Termination) = 2021-02-14.
This is a full month, just as the 2021-01-15 to 2024-01-14 term is a full 3 years, so 36 months.

Cause

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