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Asset leasing modifications

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Posted on by Mafalda Braga

Hi Community,

When doing modifications on a lease, I would like to keep my old payments with the initial borrowing rate I defined, and have my future payments with a new rate. If I edit the lease and re-generate the books it will "delete" the history and recalculate all payments with the new rate. How can I do this?

I also have another question: I tried to use Adjustment wizard but the button is disabled and I am not allowed to click on it. Does anyone why this is happening?

Thanks

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Hi Malfalda,

Lease modifications are made on a prospective basis, meaning the historical lease payments are not included in the present value calculations. However, you are able to view the old versions of the lease, lease books, and schedules even after adjusting a lease.

Here you can view historical lease schedules including those old payments at the previous rate:

Regarding the adjustment button, is the lease you're adjusting have a lease status of "Open" for all lease books? Also, are there multiple leases highlighted when you try to click "Adjustment wizard"?

Thanks!

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Mafalda Braga 25 on at

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Hi Brian,

Thank you for your response.

I understood your explanation about being able to see the old versions of a book, but still I have a question: if I have a lease with a set of payments detailed on Payment schedules and I want e.g. to add additional monthly instalments with a different rate, it will also recalculate the previous payments already in the schedule. How can I avoid this? Should I delete the old ones when I enter the new ones?

Regarding the "Adjustment wizard" button, I am trying to select it within the asset lease. How can I check if my lease has an Open status?

Also, what is the difference between this button and the "Adjust lease" button?

Thanks.

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Mafalda Braga 25 on at

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Hi again Brian,

I have now seen that all my leases have a status of "Not yet acquired". Is this the problem?

Thanks.

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Hi Mafalda,

To answer your first question and without knowing the exact details, the Asset Leasing module will discount all prospective lease payments with the same rate. If you have a lease modification and the rate has changed, you should enter the new incremental borrowing rate and only the payments that occur on or after the date of the modification.

To answer your second question, you are not able to adjust a lease with a status of "Not yet acquired" because you can simply edit the information and regenerate the books. In your example, the commencement date appears to be March 2021 - in order to create an adjustment journal entry, this lease should be initially recognized and posted up until the date of the modification.

The Adjustment Wizard button is only visible if you have enabled the Adjustment Wizard feature. Otherwise, the Adjust Lease button will appear. The Adjustment Wizard button streamlines the adjustment process and shows a preview of the adjustment before you post that entry. It also runs several conditional checks to ensure the lease has been properly posted up until the date of the modification.

Thanks!

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Mafalda Braga 25 on at

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Hi Brian,

Thank you very much for your response.

I have now understood the process and the Adjustment wizard became available, as soon as I posted up until the date of the modification.

Thank you

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