2927341 - Lease Posting Run - How to Handle Operating Expense and Finance Lease Postings?

• For Accounting Principle XXXX you maintain Lease Valuation Type 2 - ASC842 as you plan to create Lease Contracts with Lease Objects either treated as Finance Lease or as Operating Expense in Accounting (XXXX refers to the Accounting Principle ID).

• You notice that for the Fixed Assets subledger it is possible to select Lease types for each Account Determination Group.

• But when maintaining the Lease Liability Account Determination setting for the General Ledger you cannot choose any Lease Type. Therefore the Lease Posting run cannot consider a Lease Object's relevance as Finance Lease or Operating Expense.

SAP Business ByDesign

1. In the Business Configuration work center go to the Charts of Accounts, Financial Reporting Structures, Account Determination Fine Tune Activity, either from the Implementation Projects Activity list or from the Overview. 
2. Under Account Determination select Fixed Assets.
3. Select the respective Account Determination Profile using Accounting Principle XXXX. 
4. In the Historical Cost and Depreciation tab you can assign different G/L accounts to different Lease Types.
5. Now Change the Subledger to General Ledger. 
6. Navigate to the Lease Liability tab. 
7. Here, it is not possible to differentiate between Lease Types. Therefore, all postings generated by the Lease Accounting run can only be posted to one account, not regarding the Lease Object's relevance as Finance Lease or Operating Expense. 

Currently, it is not possible to automatically generate Lease Type relevant Lease Valuation postings as, in Account Determination there is no option to differentiate the G/L Account assignments per Lease Type.

As a workaround,

• you could create and define Lease Contract Object Types, either to be used as Financial Leases or Operating Expense Lease

• assign these to different Account Determination Groups to the Lease Contract Object Types and

• eventually assign different G/L Accounts to the different Account Determination Groups.

Maintain/create the Account Determination Groups that are to be used:

1. In the Charts of Accounts, Financial Reporting Structures, Account Determination Fine Tune Activity, go to the Edit Account Determination Groups link.

2. Under General Ledger go to Groups for Other Liabilities.

3. Maintain/add the Lease Object relevant Account Determination Groups:

For example,

- use the pre-delivered Account Determination Group A-1800 Lease Buildings for Financial Lease relevant postings.

- Add another Account Determination Group, for example Z1800 which is used for Operating Expense Lease postings.

Maintain/Create Lease Object Types:

1. In the Lease Management Accounting Fine Tune activity go to the Maintain Lease Contract Object Types link.

2. Maintain/add the Lease Contract Object Types:

For example,

- use the pre-delivered Lease Contract Object Type 0002-Building, which is to be used for  Lease Objects classified as Financial Lease.

- Add another Lease Contract Type, called, for instance, Z002, which is to be used for Operating Expense Lease Objects.

Maintain/Assign the Account Determination Groups to Lease Contract Object types:

1. In the Lease Management Accounting Fine Tune activity open the Account Determination Group for Lease Contract Object Type link.

2. Maintain/add the Account Determination Group- Lease Contract Object Type combinations:

For example,

- for Financial Lease postings assign Account Determination Group A-1800- Buildings to Lease Contract Object Type 0002- Buildings.

- For Operating Lease Postings assign the previously created Account Determination Group Z1800 to the newly created Lease Contract Object type Z002.

Assign different G/L Accounts to the different Account Determination Groups:

1. In the Charts of Accounts, Financial Reporting Structures, Account Determination activity go to Account Determination and select General Ledger.

2. Select the respective Account Determination Profile and go to the Lease Liability tab.

3. Maintain/Add the Account Determination Group - G/L Account combination:

For example,

- assign G/L Account ABC to Account Determination Group A-1800 Buildings for all Finance Lease postings.

- Add Account Determination Group Z1800 and assign G/L Account DEF for all Operating Expense postings.

(ABC and DEF represent two different G/L Account IDs)

However, this workaround can only be applied if your Lease objects are of the same Relevance (either Operating Expense Lease or Finance Lease) across all Set of Books.

If the used Set of Books report according to different standards, such as ASC842, which requires the definition of Lease Objects as either Operating Expense o Finance Lease,  and IFRS16 where Lease Objects are always classified as Financial Lease, this workaround can only be applied if the different Set of Books use different Chart of Accounts.

Alternatively, you could analyze all Lease Contract Valuation postings with a Lease Contract relevant report and then repost the respective values per month, quarter or year to the respective G/L accounts.

 Lease Management Accounting: Configuration Guide

Operating Expense, Financial Lease, Lease Contract Management, Lease Type , KBA , AP-ACC-LM , Accounting Lease Management , Problem