The Lease Amortization function permits a user to split a lease into equal installments.
Prior to creating a lease offer, the following set up should have been completed first:
1. From the homepage, go to Finance module.
2. Navigate to the SubCategory Amortization and select Lease Amortization.
- The lease term is defined to be the non-cancellable period.
- The system will compute the differences between "Total rental billed" versus "Total Rental to be Recognized" under the straight-line account requirement for any given lease in order to derive the total "Amortized Rental" amount to be recognized.
- The system will post and recognize all “Cumulative Amortized Rental” differences that have not been not recognized (not posted) for the given reporting accounting period.
- The system will compute:
i) Monthly Rental To Be Recognized = Amount of rental that can be recognized base on
straight-line account method (based on total contract value);
ii) Monthly Rental Amortization Amount = Cumulative Monthly Rental To Be Recognized -
Cumulative Rental Billed (based on billing schedule)
- The system automatically posts the “Amortized Rental” against “Accrued Income” at every end of month (end of accounting period) for each relevant contract.
- The system permits users to do ad-hoc run of Rental Amortization for any selected accounting period during which the system will find all remaining “unposted” rental differences to submit for posting. Example:
Original “Cumulative Rental to be Amortized” = $1000 as at Jan20, and the amortized rental
amount $1000 has been fully recognized.
After a contract modification, the revised “Cumulative Rental to be Amortized” as at Jan20 is
$1100. Ie, $100 difference has yet to be recognized.
The ad-hoc Rental Amortization run shall be able to pick up the $100 differences for posting.
Note: If there is no ad-hoc posting for Jan20, the cumulative differences shall be
automatically pick up in the next Rental Amortization run in Feb20.
The system tracks the rental amortization schedule, and provide the following reports:
iii) Rental Amortization Report as at selected Reporting Period: Show the as at report date value
per by contract, and the cumulative posted vs unposted differences;
iv) Rental Amortization Schedule: the full amortization schedule for any selected contract(s).