Lease Card fields descriptions

Lease Agreement section

General information about the lease:

Lease No. – unique number of the lease within the company.
External Ref. No. –another lease ID, not necessarily unique. Can have a relation to Contract or Annex No.
Source System –short name of data source (like LAMS, SPAN).
Lease Status – it shows the stage the lease is at:

• "In deliberation" - new lease, data entry/edit in progress. In this status you can provide partial data).
• "Signed" - lease contract signed. Data must be complete for this and higher statuses. System will not produce G/L postings yet.
• "Active" - system will post to G/L as at "Commencement Date".
• "Extended" - set this status when you update Active lease to run longer than "Contractual Lease Term".
• "Terminated" - set this status when you need to close Active lease now. In Parallel you need to adjust "Estimated Ending Date", which is date of actual termination, in this case.

• "Expired" - system will automatically set this status for leases which come to natural end (i.e. " Expected Ending Date" reached, which is equal to or higher than Contractual lease term).

The field is not open for manual change.

Inception Date – date when lease contract was signed.
Commencement Date – date when lease contract starts.
Lessor No. and Lessor Name – select the Lessor for the lease (company or person).
Dimensions (e.g. Cost Center Code and Profit center code) – assign the lease to the corresponding dimensions. It is mandatory to assign a lease to a dimension or several dimensions if required in G/L system.
Lease Category – category for the lease. Users must respect possible options, listed in the option list. Lease categories groups leases to different GL accounts and accounting rules.

Lease Terms and Asset Depreciation Section

Term parameters for lease and asset depreciation:

Contractual Lease Term (months) – original term of the lease, as per contract.
Option to Extend (by no. of months), reasonably certain – if reasonably certain, provide additional number of months for the lease to be extended.
Option to Terminate (at month no.), reasonably certain – if reasonably certain, provide month number, at which you will terminate the lease.
Lease Term (months) – system calculated field for the lease term. For the calculation SOFT4Lessee takes into account the “Contractual Lease Term (months)” together with option to extend or terminate.
Expected Ending Date – system calculated field of the date when lease will end as per current estimate, taking into account renewal or termination option, which you are certain to exercise (the date may change afterwards).
Contractual Renewal Option – options to extend the lease, in free text. Not necessarily "certain to exercise".
Contractual Termination Option – options to terminate the lease, in free text. Not necessarily "certain to exercise".
Contractual Lease End Date – original lease end date as per contract.
Actual Termination Date – date of the lease termination in the system.
Lessee gets title of ownership? – choose Yes if you are going to own the asset after end of lease (purchase option). Otherwise, leave No.
Economic life of underlying asset (number of months) – fill in only if "Lessee gets title of ownership?"=Yes. Otherwise, leave blank. This value is used to determine depreciation term for the asset.

Lease Term (months) – system calculated field for the lease term. For the calculation SOFT4Lessee takes into account the “Contractual Lease Term (months)” together with option to extend or terminate.
Depreciation Term (months) – system calculated field for the depreciation term. If "Lessee gets title of ownership?"=Yes, then Depreciation term is the same as “Useful life of the right-of-use asset (months)”. Otherwise it matches with Lease term.
Asset Description - Asset description in free text. Address of leased property, for example. Optional field.
Unique ID of the Asset – VIN number or Serial number or Registration No. which uniquely identifies the asset. This field is optional, however, it will make it easier to locate the lease in the system by knowing the asset (car license plate no., for example).

Payment section

Values for the lease payment schedule:

Payment Frequency – lease payment frequency. Available options: Weekly, Fortnightly, Monthly, Quarterly, Semi-Annual, Annual.
Number of Payments – system calculated field of number of future lease payments.
Payments per Year – system calculated field of how often you will make lease payments during the year.
Payment Due (In Arrears / In Advance) – as per Lease contract, if payment due at beginning of rental period – enter “In Advance”, if payment due at end of rental “In Arrears”.
First Instalment Date – date of the first installment.
Pro-Rata First / Last Payments – splits amounts based on commencement date during the period.
Structured Schedule (irregular payments) – mark the tick box if want to lock the manual adjustments in the payment schedule.
Description of Schedule Structure – free text box to add a description regarding the payment schedule adjustments. Must be used only if “Structured Schedule (irregular payments)” ticked.

Following fields are used when there is changes to payment schedule but you do not want to use structured schedule
Fixed increase Rate % - percentage by which payments increase every frequency specified.
Fixed Increase From Period No. – from which period to calculate frequency increase.
Fixed Increase Frequency (Payment periods) – how many payment periods to increase payments. For yearly increase with Monthly payments enter 12. For yearly increase with Querterly payments enter 4.
Rent Free From Period No. – From which period to clear out payments (interest and Depreciation still calculated). For starto f lease enter 1.
Rent Free to Period No. – To which period should rent free occur. Including To period No. For first 3 months free values should be 1 and 3.
End of payment schedule modifying fields

Lease Currency – currency code of the lease, if lease is contracted not in local currency.
Currency Factor at Commencement – currency exchange rate for the lease currency at the commencement date.
Payment Amount – periodic payment amount.

Special First Payment – used when the first payment is different from the regular payment.
Special Last Payment - used when the last payment is different from the regular payment.
Non-Lease Component in Payment– cost of services or other non-lease cost must be stated in this field, if services are included in "Payment Amount. For example: office rent, monthly, "Payment Amount" = 5'000 with cleaning services included. You estimate the cost of services 800eur and enter in this field. The SOFT4Lessee system will calculate Lease Liability based on 4'200eur monthly cash flow. The 800 will be treated as operating cash flow.
Lease Payment Amount – system calculated field of the lease payment, taking into account non-lease component. The amount is used to evaluate the lease liability.

Interest Rates section

Includes parameters to calculate lease liability:

Interest Rate implicit in the lease – Interest rate in the contract, as annual percentage rate (APR). Values between 0 and 100 allowed, rounded to seven decimals.
Lessee’s Incremental Borrowing Rate – provide interest rate value, if discount rate option is "Incremental borrowing Rate at Commencement Date".
Incremental Borrowing Rate Source – used only if discount rate option is "Incremental borrowing Rate at Commencement Date". Leave the “Incremental Borrowing Rate Source” =Manual if you manually enter the interest rate or choose “Incremental Borrowing Rate Source” = “From Setup” for the system to bring the global interest rate from the setup.
Discount Rate Option – If interest rate is said on lease contract, must use option "Interest rate implicit in the lease". Otherwise, use "Incremental borrowing Rate at Commencement Date" and give interest rate value in “Lessee’s Incremental Borrowing Rate” field. As part of lease modification, you can change the interest rate. In this case use option "Incremental borrowing Rate at Modification Date", together with "Discount Rate Value Date" column.
Discount Rate – system calculated field. The value depends on the “Discount Rate Option” and provided rates. It is used to calculate PV of the lease.
Discount Rate Value Date – provide the date when the discount rate became valid(For Incremental Borrowing Rate at Modification Date). Dependant on this date system will take Incremental borrowing rate from setup with all of other lease parameters.

Variable Lease Payments section

Is applicable for leases that contain payments based on repricing.

Variable Lease – option of the variable payment recalculation type:

• “Not applicable” – default options of every lease, means that lease payments are fixed.
• “Initial Payment x Index” – indexed payments are calculated by applying index value to the initial payment.
• “Reference Rate % + Fixed Interest %” – payments are based on reference rate and fixed interest.
• “Other (manual)” – the system will not apply automatic revaluation, and the prices will require to be updated manually based on the internal calculation rules.

Last Repricing Date – date when “Current Value of Index” was last applied to calculate current payment.
Next Repricing Date – date when next re-pricing is due. "Re-pricing" is change of "Payment Amount" due to change of "Current Value of an Index" on "Next Repricing Date".
For example, how these data fields will be used in SOFT4Lessee:

• Description of an Index = CPI-NL
• "Current Value of an Index" = 5.0
• Payment Amount = 5000
• "Last Repricing Date" = 25.01.2018
• "Next Repricing Date" = 25.01.2019
• After re-pricing run on 25 Jan 2019:
• "Current Value of an Index" = 5.1
• Payment Amount = 5100,
• "Last Repricing Date" = 25.01.2019
• "Next Repricing Date" = 25.01.2020

Repricing Period – frequency of indexation. For example, if indexation frequency is 12 months, “Repricing Period” = 12M.
Contractual Repricing Terms – free text description regarding repricing.
Index – index code of the lease.
Initial Lease Payment – initial contractual payment amount.
Current Value of Index – Index value on which current payment is based.
Index Floor – minimal value of the index.
Index Ceiling – maximal value of the index.
Description of Reference Rate – free text description regarding reference rate.
Fixed Interest Component % - fixed interest component to be used for repricing.
Reference Rate Component % - reference rate component to be used for repricing.

Initial Measurement section

Additional figures to evaluate liability and right-of-use asset. It also provides general calculations for liability and right-of-use asset.

Residual Value Guarantee – provide the residual value due at the end of term. This amount will be included in cash flow projection, due at "Estimated Ending Date".
Exercise Price of Purchase Option (reasonably certain) – only include estimated Purchase price if reasonably certain exercise purchase option. This amount will be included in cash flow projection, due at "Estimated Ending Date" and will be included in Lease Liability at NPV (discounted).
Penalty for Terminating (if reasonably certain) – Only include estimated Purchase price if reasonably certain exercise purchase option. This amount will be included in cash flow projection, due at "Estimated Ending Date” and will be included in Lease Liability at NPV (discounted).
PV of Amounts Due at Lease Term – system calculate field of the PV of amounts that will be due at the end of the lease (does not include discounted lease payments).
Present Value of Lease Payments – system calculate field of the PV of all lease payments (does not include other amounts due at the end of the lease).
Lease Liability at Commencement Date – system calculated field of the PV of all lease payments and other amounts due at the lease end.
Lease Payment made on or before commencement date – provide the amount pre-paid before periodic lease payments start. The amount must be equal to actual accrual in G/L.
Incentives Received – incentives received from the lessor in monetary terms.
Initial Direct Cost – Other costs (except for lease payments) to be included in RoU asset and amortized over the term. The amount must be equal to actual accrual in G/L.
Estimated Cost for Dismantling/Restoring Asset – Provision for Costs of dismantling / restoring the asset at the end of lease, if provision done on this individual lease. If provisions are done for group of similar leases, leave the value zero. The "Estimated Cost for Dismantling / Restoring the Asset" will be part of RoU asset value, however, at initial adoption of IFRS16 RoU asset value will be set equal to Lease Liability, so this column has no effect.
Description of Dismantling Obligation – free text field to leave comments regarding asset dismantling/restoration.
Right-of-use Asset at Commencement Date – system calculated field of the RoU asset at the commencement date.

Migration section

Information when leases are already calculated for IFRS16(AASB16) or ASC842 standards but don’t want to include postings from start of lease. To activate it Migration Enabled must be toggled in Lease Setup.

Migration date – from when calculate schedules from. Takes priority over Commencement Date. Has to be larger than Commencement Date.
Next Payment Date on Migr. – still uses First installment date for day of the month. Clears all of the payments before this date.
Migr. Lease Liability balance – total liability balance at the date of migration
Migr. RoU Asset Balance – automatically calculated by subtracking Accum. Depreciation at Migration Date from Historical Asset Cost.
Historical Asset Cost – Initial lease Right-of-Use Asset amount.
Accum. Depreciation at Migration Date – value of total depreciation done until migration date.