Fusion Lease accounting questions

Oracle Financials Cloud

Last Post by Parimal 4 months ago

1 Posts

2 Users

0 Reactions

165 Views

07/07/2024 10:02 pm

Topic starter

vinay.ocp

New Member

1 Posts
1 0 0

I purchased the Oracle lease accounting subscription to gain clarity on a few items. However, the training only covers the basics, so I would appreciate your assistance in clarifying the following points. Could you kindly provide your insights on these questions?

1. During conversion & testing, I used actual asset numbers to convert leases with the assets which currently reside in Fixed assets (FA) and leases from the legacy Lease accounting system. The business has expressed dissatisfaction with the resulting journal entries if we use actual asset numbers in oracle lease accounting. Is there a way to summarize these entries if we continue with this approach since Journal entries get created for 100 assets if we have 100 assets in a lease? please suggest if i proceed with including FA assets to Oracle lease accounting or shall i not retire existing assets from FA and create dummy assets in Oracle lease accounting? If we create dummy assets or provide asset numbers as lease numbers then would there be any financial impact?

Also, how would we exclude depreciation and other accounting entries for dummy assets if we continue to have assets in FA? These assets would be depreciated in FA.

2. Opening Right of Use does not match with the opening liability when we entered the opening ROU from the legacy system. Can you please suggest an option to enter Liability amount in the conversion template or how to sync opening liability with opening ROU? I have already downloaded the provided sheet from Meta link and understand the PV and other calculations.

3. Currently, our options are limited to using only the Daily Compound Interest rate in the lease module, with the choice between 'Periodic Amortization' and 'Daily Amortization' in System Options. However, both options result in a variance in amortization calculations between legacy and Lease accounting. We need the option of "Annual Compounding" to avoid variance between LeaseCalc legacy and Oracle Lease Accounting. Are there any alternative solutions you can suggest?

Thank you!

Regards,

Vinay Singh

Answer

Parimal 18/07/2024 10:34 am

1 - Fixed Asset is different than Lease Accounting. FA & FLA differ in Accounting standards. For all the FLA transactions we can use any FA information. Please note FLA is more about ASC 840 where lease liability, ROU are referred so do not think this might be affecting any of the FA information. Few follow Q's - What type of industry we are referring here? Are we using FA and leasing them? Are we Lessor or Lessee type of business model?

2 - Are we referring some FBDI template for the upload of legacy transactions in FLA system? Where are we getting the ROU & lability amount values from? What type of conversion template we are using? Is the source system not providing the balanced entry? Unless, we get more clarity it's difficult to understand the use case here.

3 - Not sure if Oracle is yet providing different Amortization methods other than Periodic & Daily. Usually Oracle releases new features and Annual might be another upcoming feature provided by them. It would be better to ask Oracle Support for this.

Few follow Q's - What type of Lease calculation 3rd party are we using? Where do we see the variance? How do we know which amortization values are correct?

Add a comment