Lease Account Type Setup

Lease Account Type Setup

Purpose

To differentiate different types of Leases

Example account types may be:
  1. Operating 
  2. Finance
  3. Maintained
  4. Non-Maintained
  5. Print Copy
  6. Cost per Copy

Access

  1. Account | Edit/View Account Types |  |  

Dialog Details

The following dialog will display:



This screen needs to be separately set up for each Lease System account type used

The second cost item MUST be GST, even if the lease cost price is GST exclusive

In that case the GST value will be 0.00

If the second cost item is not GST, the  functionality will not work

Important Note 
The items from Gross Cost Price down to Instalment Current Tran Type DO NOT need to be completed if this Account Type is represented by the Lease Control Details set up.  For all other account types these fields must have an entry for every item on the Control Details that has an entry, where the purpose of the Transaction Type of different (e.g. different GL Code).

Details Specific Fields

Field
Explanation
Direct Debit Communication Type
[F2] to highlight and  the Communication Type that is to be used to notify clients of their next Direct Debit Amount
First Payment Missed Letter
[F2] to highlight and  the Communication Type that is to automatically produce a letter if the first payment that is due to be made on a Lease has been missed (applies to Finance Leases as Operating Lease payments are in advance)

This letter is produced once, and only if the very first instalment payment is not paid

After this, normal arrears processing takes over
First Overdue Letter
[F2] to highlight and  the Account Letter that will start the overdue letter sequence based on the rules set up 
Write Off Tran Type
[F2] to highlight and  the Transaction Type will be used to post the write off or up of a balance left on a lease account either when it is early terminated, or later during a separate write off process
Write Off Default Interest Tran Type
[F2] to highlight and  the Transaction Type that will be used to accept the write off of default interest on the current ledger at the time of early termination
Dealer Payment for Assets
Enter the Transaction Type that will be used to post the value of an asset from the lease account to the associated dealer account for a Finance Lease
Although a mandatory field, this transaction type is not used for the processing of assets on an Operating Lease

That is controlled by the  process
Unearned Interest
There are four options available:

Actuarial
Used for leases where the interest is recognised on a daily basis
No Deferral
Used for Operating Leases where the instalment amount is a rental and considered to be income
Rule 78
Used for leases where the interest is recognised using the Rule of 78
Straight Line
Used for leases where the interest is recognised on a straight line basis

GL – Unearned Interest BS Account
[F2] to highlight and  the GL Code to which Unearned Interest will post

This GL Code MUST be unique for each account type

This field will be blank for Operating Leases where income is recognised as rental
GL – Interest Income PL Account
[F2] to highlight and  the GL Code to which Interest Income will post

This field will be blank for Operating Leases where income is recognised as rental
Invoice Comm (for instalments)
[F2] to highlight and  the Communication Type that is to automatically produce an invoice at the time the instalment posting is run

This communication type will only be used if the Lease Account item Invoice Req is ticked on
Instalment Maintenance Type
[F2] to the Account Transaction Type to use for instalment maintenance postings

This is for operating leases only

When the Lease instalment posting is run, the straight line maintenance amount is posted to the accounts payable account associated with the lease asset
Post Instalments as total
A lease account can have multiple assets associated with it

If this item is ticked on, instalments for all assets with a common start day will be added together and posted as a single amount
Consumer Lease
Tick this item on if the lease is a consumer lease
Extended Rental
[F2] to highlight and  the Transaction Type to be used to post the extended rental transaction, if required, at the time the instalment posting is run

This transaction will be set up to automatically produce an extended rental invoice
Ext. Rental Reversal
[F2] to highlight and  the Transaction Type to be used to post the transaction when and extended rental transaction is reversed

If this transaction has not been set up an extended rental cannot be reversed
GL – B/S Mtce Provision
[F2] to highlight and  the GL Code that will receive the posting of maintenance set up on the lease asset

This will be the initial maintenance provision that has been added to the lease

There may be multiple lease control detail items that can be set up for maintenance

These will all post to this single GL code during the month end reset
GL – PL Mtce Expense
[F2] to highlight and  the GL Code that will receive the posting of actual maintenance expense transactions that are raised from a lease account by the  |  option, or directly from an accounts payable invoice

This is a Profit and Loss account that records the maintenance expense on leases  

The end of month lease posting routine will sum all the leased assets and calculate the maintenance provision on all current assets

A journal is posted to force the provision account in the GL to the total calculated

The other side of the journal will be posted to this expense account
GL – B/S Mtce ACTUAL Expense
[F2] to highlight and  the Balance Sheet GL Code that will record the maintenance provision actual expenses incurred for leased assets

The end of month lease routine will sum all the leased assets and calculate the maintenance paid on all current assets

A journal is posted to force the maintenance actual expense provision account in the GL to the total calculated

The other side of the journal will be posted to the expense account defined above
GL – B/S Depn Provision
[F2] to highlight and  the Balance Sheet GL Code that will be used to record the accumulated depreciation on Leased Assets
GL – B/S Depn Expense
[F2] to highlight and  the Profit and Loss GL Code that will be used to record the depreciation expense on Leased Assets
  1. If the Lease Control Details flag Use Tax Depreciation is unchecked, this figure is a straight line calculation being the asset cost price less GST Credit less Residual value divided by the number of instalments
  2. If the Lease Control Details flag Use Tax Depreciation is checked on, this figure is a diminishing value calculation based on the asset cost price at the depreciation rate specified on the lease asset
The end of month lease routine will sum all the leased assets and calculate the depreciation provision on all current assets

A journal is posted to force the provision account in the GL to the total calculated

The other side of the journal will be posted to the expense account
GL – P/L Depn Loss on Sale
[F2] to highlight and  the Profit and Loss GL Code that will be used to receive postings of losses on sales from the disposal of leased assets through the leased asset Sell option
GL – P/L Depn Profit on Sale
[F2] to highlight and  the Balance Sheet GL Code that will be used to receive postings of profits on sales from the disposal of leased assets through the leased asset Sell option
GL – P/L Depn Recovered
[F2] to highlight and  the Profit and Loss GL Code that will be used to receive postings of depreciation recovered on sales from the disposal of leased assets through the leased asset Sell option
GL – B/S Fixed Assets
[F2] to highlight and  the Balance Sheet GL Code that will be used to record the cost price of lease fixed assets

The end of month routine will sum all leased assets sold during the month and post a journal to the GL system to reflect the sale

Debit loss, credit profit, credit depreciation recovered, credit the fixed asset account the initial cost price, and debit the depreciation account expense as noted above for the difference

The Fixed asset account will be updated via the payables system, receivables system or the dealer system depending on how the initial purchase or final sale of the asset is made
Post Disposal Mtce Tran Category
Each Maintenance Type has a maintenance category of either lease or asset

This option determines which maintenance types can be used when purchase orders are raised against assets that have been sold or re-leased

The options here are:

Any
No restrictions on the type of maintenance that can be used for Sold or Released Assets
Asset
Only maintenance types that have an asset maintenance category can be used for Sold or Released Assets
Lease
Only maintenance types that have a lease maintenance category can be used for Sold or Released Assets

Unpaid Item transaction Type
[F2] to highlight and  the Transaction Type that is used to post lease unpaid item transactions

This field will be completed for any banks where the reason for the dishonour is unknown
Unpaid Item Dishonour Code
[F2] to highlight and  the Table of Dishonour Codes that will allow the use of the correct Dishonour Transaction Type based on the reason for the dishonour

This field will only be completed for Banks where the reason for the dishonour is recorded against the dishonoured transaction on the bank statement
Interest Rebate Tran Type
[F2] to highlight and  the Transaction Type that is used to post the interest rebate on Lease Early Termination

If the lease is a rental, then this Transaction Type will be used for the write off of any rental amounts
Rebate Default Percentage
Enter here the default rebate percentage

This will be used to calculate the percentage of unearned interest that will be rebated on any leases that calculate income Actuarially

The calculated amount will be displayed in the Interest Rebate field on the Lease Early Termination Dialog

The rebate percentage may be changed on the early termination dialog.
Termination Method
Select from the drop down box the method to be used for early termination.

Rental Standard
This will be used for all leases that recognise their income under the No Deferral Method (Rental Income), and that are not to use the NPV calculation.

Rental NPV
This will be used for all leases that recognise their income under the No Deferral Method (Rental Income), and that are to use the NPV calculation to work out the value of future instalments.

P & I Standard
This will be used for all leases that recognise their income under the Actuarial Method (Principal and Interest split), and that are not to use the NPV calculation.  The rebate default percentage can be applied to terminations using this method.

P & I NPV
This will be used for all leases that recognise their income under the Actuarial Method (Principal and Interest split), and that are to use the NPV calculation to work out the value of future instalments.

P & I NPV (FL)
This will be used for all leases that recognise their income under the Actuarial Method (Principal and Interest split), and that are to use the NPV calculation to work out the value of all future instalments, except the final instalment.  The final instalment is treated as a residual value and added to the termination total.
Discount Transaction Type
[F2] to highlight and  the Transaction Type used to post The NPV discount calculated on early termination

This field will be enabled to select a transaction type if the Termination Method is set to P & I NPV, P & I NPV (FI) or Rental NPV

It is anticipated this transaction type will post to an NPV Clearing Account in the General Ledger

From here a month end journal will be raised to transfer the balance split between the net NPV value and the tax components

A separate transaction type can be set up for each termination method posting to separate GL Codes if required
Discount Rate
Allows discount rate entry of a value up to 100.00
ET Residual Transaction Type
[F2] to highlight and  the Transaction Type used to post the Residual Value on early termination

It only applies if the Termination Method is set to P & I NPV
Unused Maint Transaction Type
[F2] to highlight and  the Transaction Type used to post the rebate of Unused Maintenance on early termination

It only applies if the Termination Method is set to Rental NPV

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