Real Property / Leases / Background Data
Define Subledger Rules
If you are using the Extension for Lease Accounting, the Navigator includes the Leases / Background Data / Define Sub-ledger Rules task (ab-ls-subledger-rules-define.axvw
). If you are not working with the Extension for Lease Accounting, you do not need to work with this task.
When classifying leases, organizations run the Generate Subledger Entries for Leases task to generate the lease data in a format usable by the Accounting department for their general ledger. This data must be generated according to business practices at each site. For instance, each organization will have its own account codes. Likewise, when accounting for leases in transition, organizations may or may not use an "Equity (retained earnings)" account. Organizations can change how the Generate Subledger Entries for Leases task works by editing the underlying rules stored in the Lease Subledger Rules (ls_subledger_rules
) table.
The subledger rules define the transitions that a lease goes through, such as transitioning from an operating lease to a finance lease, so that the Lease Classification Wizard can correctly report the financial data for each transition. For example, for some transitions, the rules define that the Wizard report a legacy obligation as a line item. Similarly, the rules can define how you report an increase or decrease in ROU Asset value as a result of the cost of an executed right-of-use option. Other rules define how to handle international leases so that they follow IASB conventions.
To generate the subledger items, the program follows the rules in the Subledger Rules table to copy values from the amortization schedule to the records of the Subledger Items table. Most of these rules are straightforward: they copy a particular value, such as the ROU Asset value, from a particular fiscal period of the schedule. However, some rules compare two values – such as a value from the fiscal period before and after an ROU Asset modification – and others sum several values, such as the Accrued rent liability (deferred rent) from a legacy lease.
The system applies the rules according to the values for these fields:
- Legacy Lease Classification
- Lease Guidance
- Payments Scheduled
For instance, defining a rule for which Legacy Lease Classification is "ASC 840 - Capital" and Lease Classification is "ASC 842 - Finance" tells the program to apply that rule when generating entries for each lease that was reclassified from 840 Capital to 842 Finance (and only to those leases). The rules are additive: that is to say, the program generates sub-ledger entries for all rules that apply to a particular Legacy Lease Classification and Lease Classification combination
In the schema database, the Lease Subledger Rules table includes the default set of rules. When you start a new project, the rules are automatically available to your new project. You can then edit these default rules and create new rules to match the operations at your site.
Procedure
- Load the Real Property / Leases / Background Data / Define Subledger Rules task.
- Define a rule by completing these fields:
Field |
Description
|
---|---|
Rule ID | Identifies the rule. |
Legacy Lease Classification |
You can choose from:
Use "None" if there was no Legacy Lease Classification. |
Lease Guidance |
Choose from:
|
Description of Sub-ledger Entry | Describe the rule. |
Post to Which Account |
Choose an existing account from the validating Accounts table. The rule will post the value in the "Value to Post" field to this account. Each organization can use its own Account Codes. The default Account Codes are:
60500 -- ROU Asset |
Fiscal Period to Apply Rule |
Choose from:
|
Post as Credit or Debit | Choose Credit or Debit to indicate which field – Credit or Debit – the program should post the value. |
Value to Post |
Complete this field with the string holding the name of a value to post, such as These values are typically entries from the amortization table, or calculations on the amortization tables (such as, a calculation to find gain or loss between two schedules). |