Dynamics Community Forum Thread Details

Wave 2 Asset Leasing: Lease Prepayments

Hi All,

Is there a way that when a Lease prepayment is specified to a specific Lease Summary, these prepayments will then be applied on the first months of the lease payment?

I specified Lease prepayments amount, these amount is equivalent to at least 5 payments. However, the system continues to generate payments without considering the prepayment amount.

Is there a way to deduct the prepayment on the first months until the prepayment is consumed?. Can someone point me to the right direction? Appreciate your replies.

Thank you in advance.

Aleeia

Hi Aleeia,

The specified "Lease prepayments" under "Additional asset consideration" field group does not affect the lease payment schedule amount, and this is expected behavior. The prepayment functionality is a lumpsum amount considered during initial recognition transaction. The prepayments represents the amounts to be paid to lessor and this amount will be considered in the Right-of-use asset (ROU) but will not considered in lease liability (it will be paid apart from lease future payments).

Assumes, there is a Finance lease with the shown data in the following screenshot, please note that the prepayment amount is $1,000.

After Create schedules/Generate book the initial ROU and initial liability are calculated. Please consider the generated Initial recognition entry has the prepayment amount and this prepayment will be posted to separate account (or vendor ID if the Pay to vendor is activated on this particular book) than Lease liability (in the demo data it is posted to Notes payable account)

The Payment amount in Payment schedule form is called from the Payment schedule lines. In case of there are prepayments are involved in the lease contract, you'd need to consider deducting the pre-payment amount from the defined amount in the Payment schedule lines since the prepayment amount will be paid to the lessor and no need to consider it again in the future payments (this would be considered duplication).

Assumes, there is a Finance lease, with lease term 24 months payment amount per month is $1,000 (total lease contract is $24,000) and pre-payment is $1,000 will be distributed over the first 5 months of the lease.

In that sense, you'd need to add the first 5 payment schedule lines with $800 (you already have the prepayment $1000 as lumpsum amount posted to Notes payable account of which posted on initial recognition entry). The remaining 19 months keep the amount as $1,000 since the lessee did not prepay for those months. And keep the Prepayment amount $1,000 to be considered in the ROU).

Hence, the generated payment schedule will be for the first 5 months the payment amount is $800 and the rest is $1,000. And those amounts will be reflected on the payment journal creation.