3536736 - Unexpected interest expenses in the Lease Contract Valuation Cash Flow report

Symptom

The interest expense value is visible in lease contract 'AA,' despite the interest rate for this contract being maintained at 0%.

'AA' refers to Lease contract ID.

Environment

SAP Business ByDesign

Reproducing the Issue

Go to the Lease Contract Management work center.
Go to the Lease Contract sub view.
Search for the Contract 'AA'.
Select row and click on Report: Lease Contract Valuation Cash Flow.
There, the Expense calculated as 66.300,10 CHF in the Interest Expense Company Currency row.

Please note: Amounts, dates and currency mentioned in this document is an example to explain the calculations.

Cause

This is the expected system behavior. For the Lease contract 'AA' you have maintained Lease contract type as 'Retrospective non historic type transition contract'.

For this transition contract cashflows before 01.01.2024 (beginning of the year) are not relevant for postings.

Check the below calculations: (Example references)

Lease Liability value of the Lease valuation object item: 205463.92 CHF

Lease liability Opening balance: 271763.92 CHF

Repayment cost = Lease Liability value - Lease liability Opening balance

Repayment cost = 205463.92 – 271763.92 = - 66300.10 CHF

Ideally Clearing Cost of irrelevant cashflow intervals won't have clearing postings presence for those amounts (i.e., 0 CHF)

Interest Expense for the last cashflow item = Clearing cost – Repayment Cost = 0 – (-66300.10 CHF) = 66300.10 CHF

The above calculation and explanation are for retrospective transition contract approach and in the cumulative approach there will not be any similar kind of interest expenses accumulation in the end of the cash flow item. This is how you see the Interest expense in the 66.300,10 CHF Lease Contract Valuation Cash Flow.

Resolution

The lease liability value which is calculated during not-relevant periods based on the Lease contract transition date was not covering under clearing postings and so those values are appearing in interest expense value of the last cashflow item.

As a workaround instead of Retrospective transition type, the cumulative transition approach will be helpful in order to remove the huge interest expense at end of the cashflow item.

Keywords

Lease Contract Valuation Cash Flow, Interest expenses, Lease Contract, Lease Liability value, Retrospective transition type. , KBA , SRD-FIN-GL , General Ledger , Problem

Product

SAP Business ByDesign 2408