All companies leasing property and non-property assets are currently impacted by recently modified accounting standards.
The changes mean that leased assets might need to be accounted for on the company’s balance sheet, and organizations must recognize the assets and the liabilities associated with the lease. These assets are called Right of Use (ROU) assets.
All licensed users of the JD Edwards EnterpriseOne Financial module can manage their obligations under the new standards without the need for licensing of any other modules.
To accommodate these accounting standards, JD Edwards uses new enhanced Lessee Accounting functionality which is integrated into existing JD Edwards modules. This includes using G/L, A/P and A/R features available in Financial Management systems.
Without having to incur the costs of additional licenses, lease terms and conditions are defined in the Real Estate Management system, and asset tracking in the Fixed Assets system. Together, this delivers a single solution for managing leases under the new accounting standard.
The new lease management features provide automated processes to create amortization schedules, periodic adjustments to the lease liability, and right of use asset balance sheet accounts over the life of a lease. These features minimize accounting errors and streamline month-end close and reporting activities
JD Edwards Leased Asset Accounting Key Features*
- Set up default lessee accounting values. Use the constants to activate balance sheet lessee accounting once setup is complete.
- Set up AAIs for balance sheet lessee accounting.
- Set up lessee accounting information for bill codes to define their impact on lease liability and ROU asset calculations.
- Define recurring or manual billing information for the lease using these bill codes.
- Manually or automatically create asset records for property units that will be included on a lessee lease.
- Create asset records during lease entry for non-property assets.
- Create a lessee lease that includes property and non-property assets.
- Define lessee accounting information for the lease and the individual assets on the lease.
- Process lease commencement activities, which includes:
- Creating lease liability and ROU asset amortization schedules for leased assets.
- Generating the appropriate lease commencement journal entries for the leased assets when the lease begins.
- Process monthly lessee accounting calculations to adjust the lease liability and ROU asset accounts associated with the leased assets.
- Easily identify when monthly accounting entries are overdue for processing.
- Process early terminations of leases.
- Process lease remeasurements when lease terms change.
- Create an alternate set of schedules to generate journal entries in an alternate ledger to accommodate multiple entity reporting for a single asset.
Leased Asset Accounting Process Overview*
- Source: Oracle’s JD Edwards EnterpriseOne Applications Real Estate Management Implementation Guide and Balance Sheet Lessee
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