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Asset Leasing Migration

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Hello Everyone,

Has anyone migrated leases that have a start date prior to 1/1/2019, when IFRS 16 became mandatory? If so, could you please let me know how you managed to handle the ROU posting?

Thank you,

Catalina

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Dynamics 365 Finance

Microsoft Dynamics AX

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ANInnoSolutions 287 on at

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Hi Community member,

can you specify the requirement and what you want to achieve or give a step-by-step explanation with a screenshot? Basically, and on the description above, find the following answer:

In D365 Finance and Operations Apps, migrating leases that started before 1st January 2019 (the IFRS 16 effective date) is possible using the Asset Leasing module, but it requires a prospective approach due to system limitations:

1) Supported Approach: Prospective
- You cannot directly input the historical carrying values of the Right-of-Use asset and lease liability. Instead, you must recreate the lease schedules in D365 FO so that the system calculates the correct opening balances as of the migration date (e.g., 1 July 2021). This means the system will start calculating from the migration date, not from the original lease start date

1.1) How to Handle ROU Asset Posting
- Use the Deferred Rent Carryover field as a plug to adjust the ROU asset value to match your actual carrying amount at the migration date
- The ROU asset is calculated as: ROU Asset = PV of lease payments + initial costs + prepayments - lease incentives ± deferred rent carryover
- This workaround ensures the system calculated ROU asset aligns with your actual accounting balances

In general, please note:
- You cannot backdate journals or schedules to pre-2019 without opening prior fiscal periods
- The retrospective approach is not supported natively in the Asset Leasing module

For a deeper dive, reach out to: Asset leasing get started - Finance | Dynamics 365 | Microsoft Learn and Asset Leasing Opening Balance Migration Guide - Prospective Approach .

Let me know, if that combination works.

Rg,

Alexander

*Due to the complex and different possibilities of deploying Dynamics 365 I highly recommend not to setup the application without some expert/partner or support. (For more information contact me under anassl@inno-solutions.info or visit www.inno-solutions.de)

*The Information comes directly from the manufacturer or provider and are validated (not guaranteed) up to date of creation of the posting.

References:

Microsoft Licensing Guide

Microsoft Doc`s/Learn

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Raj Borad 1,424 on at

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Hi @Community member,

In FO, leases with a start date before 1/1/2019 (IFRS 16 effective date) are still subject to IFRS 16 if they extend beyond that date.

For such cases, Right-of-Use (ROU) asset and lease liability should be recognized from 1/1/2019 as the transition date.

System may allows you to use the modified retrospective approach, where the lease is recorded in the system from 1/1/2019 using opening balances.

Thank you,

Raj D Borad

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