RE-FX-LA: IFRS16 Set up SUBLEASING CUSTOMER CONTRACT

[former_member594106]

Good morning experts,

in RE-FX module, IFRS16 solution, im' trying to set up subleasing contracts. but i cannot uderstand the steps to create customer subleasing contract and link it to the main leasing contract.

i created the Valutation rule Classification key "C" and i'm referring to the OSS notes 2662137 (point 12), 2406475, 2550648 and 2571712.

But i still don't understand the information and the conditions to use in the subleasing in order to adjust the right of use on the head lease.

Can anyone help me?

Thanks in advance and best regards

Giuseppe Simone

[former_member614830]

Hello David,

thanks for the above information on sub -lease scenario.

still i am facing issue linking between head lease and sub-lease scenario.

I assign the main contract no. ( Head lease ) in sub-lease contract field. but in main contract, I am unable to see ” Object relationship ” in the object tab as per the note (2662137 point no. 12 and note 2406475)

[former_member580086]

Hello Giuseppe,

You're welcome.

I'm still also struggling with the movements types. In terms of accounting my idea is the following:

Before sublease:

Assets opening balance = X; Clearing= Y

After sublease (renting 1/2 of the space):

Assets opening balance = X/2; Clearing= Y (because you continue to pay the same rent to the head lessor)

plus, you need to post the computed NPV by the company that receives your sublease in a Financial Asset account and the difference between NPV and X/2 goes to P&L (normally to a profit account).

Best regards,

David Salgueiro

[former_member594106]

Hello David and thank you for your answer.

i'm still going through the logico of Sublet contracts and now i think i'm going to set up the subleasing contract with fixed amount calculation formula, because it's more clear for my customers.

But anyway, now i 'have a new problem with psostings generated on the main contract in case you add a condition of subleasing.

It generates a disinvesture of asset, it's ok.

But at the same time it generates a movement I131 that i cannot really understand how to set up as account determination. It seems that it should be set as zero balance posting on the same tranasitory account.

Do you have any idea about this topic?

Thanks in advance and best regards.

Giuseppe

[former_member580086]

Hello Giuseppe,

Please see SAP note 2662137:

12. How can sublets be handled?

In SAP Contract and Lease Management (based on SAP RE-FX), customer contracts can be entered (including optional direct customer posting function). These customer contracts can be defined as operate leases or finance leases (See SAP Note 2255555 for information about the function and posting specifications.). Using contract types, these customer contracts can be organized flexibly into, for example, internal sublets, external sublets, and so on.

The customer sublet contract can be linked to the lease-in contract (head lease) using the following options (without automatic data synchronization between the contracts):

• Entering the head lease in the "Main Contract" field. As a result, all sublet contracts are displayed in the object hierarchy below the head lease.
• Linking the sublet contract with the head lease via object relationships ("Objects" tab).

Effects of the sublet contract on the head lease:

In the case of one (or several) sublets as a finance lease, the right of use (RoU) may have to be adjusted on the head lease. For this, relevant conditions can be entered directly on the head lease. The determination of the required adjustment amount must be carried out manually. The following RoU adjustment options are available:

• Sublease retirement (percentage):

This option leads to a percentage retirement as a real reduction (using the new internal calculation formula "95") on the basis of the net book value that exists on the key date (adjustment of APC, net book value acquisition, and accumulated depreciation). Examples:

• 100% retirement: The RoU is written off fully.
• 50% retirement: The historic APC and the accumulated depreciation are reduced by 50% on the basis of the net book value.
• Follow-on reduction due to additional sublet (scope extension or new sublet): The percentage to be entered is again based on the current net book value, that is, the RoU after sublets in the past.

• Sublease retirement (fixed amount):

This option leads only to a credit on the key date in the amount of the condition amount (condition amount must be < = net book value).

• Sublease acquisition (fixed amount):

This option leads to a RoU acquisition on the key date in the amount of the condition amount. Examples:

• End of a sublet: The RoU is increased by the required amount on the key date.
• Partial return of the sublet: The RoU is increased by the required amount on the key date.

A percentage acquisition of the RoU from sublet is not available.

It is up to the user to decide which adjustment variant to choose in which business scenario.

I think that this is key: using the new internal calculation formula "95"

I'm still investigating but I'm going to start from here.

Hope it helps.

Best,

David Salgueiro