Managing Lease Assets
Purpose
A Lease Account can have multiple assets associated with it. There are two main reasons why this may occur.
- The lease agreement may cover more than one asset. In this case, only the primary asset may have financial details, or all assets may have financial details.
- An adjustment may be required to an asset because another component of the asset has been taken or removed. In this case, each new asset will have financial details. Those details may hold negative values if there is to be a decrease in the value of the primary asset.
The set up processes for each extra asset is exactly the same as that defined in Lease Asset Details. However, there are a number of points to be aware of.
After the first asset has been set up, the Lease Asset Browse will look similar to the screen shot below. When additional assets are added, they will also display on this list.
The initial asset set up will be similar to:
Multiple Assets with Finance Details
Assume there is a trailer to be added to the lease, but these items are to be registered separately with the PPSR, and they have their own financed amount and instalments.
In this case the new asset screen will look similar to:
The main points to note are:
- The asset has finance details and an instalment amount.
- The Start Date is exactly the same as the Start Date of the primary asset. This will ensure that all instalments for the lease run at the same time and the print of the Lease
will be correct for the period of the lease.
Multiple Assets with NO Finance Details
Assume there is a trailer and tow bar to be added to the lease, but these items are to be registered separately with the PPSR, but their financed amount and instalments are included on the primary lease asset.
In this case the new Asset screen will look similar to:
This situation will occur where there are Multiple Assets to be registered with the PPSR. Each asset has its own Collateral record, so a separate asset must be set up per Collateral item to be registered.
This set up allows for easy de-registration of assets on a lease. It also records each asset component of the lease separately.
Lease Asset Adjustments
There are many reasons why adjustments may be needed to the assets on a lease. Where these have a financial impact, and will alter the amount of the instalment, a new Lease Asset is usually set up to reflect this change.
This same principal will apply at any time when a financial adjustment is to be made to a lease. The original Lease Asset details cannot be changed. Once the first lease instalment or first posting of a standard lease instalment have taken place, the instalment section of the screen is changed to display only. This means that if the finance details need to be changed it is not possible to make a change to the instalments so the dialog will not balance. The way around this is to create a new asset to reflect the adjustments that need to be made to both the finance details and instalment postings.
Assume there are two assets set up on the lease, and after 6 months it was found the initial values on the lease were too high and there had been an overcharge due to a clerical error. There needs to be a change to the lease repayments to reflect this, but we don’t want to terminate the lease and have to set it up again.
The Lease Asset set up will be similar to:
Points to note:
- The finance and instalment values are all negative, reflecting a decrease in the value of the lease. If the lease were to increase in value, these would be positive amounts.
- The day of the Start Date is exactly the same as on the other assets on this lease so all instalments post on the same date. The Start month and year have altered to reflect this is 6 months after the original lease began.
- The instalment count is 30 so this asset’s instalment postings will end at the same time as the other lease assets on this lease account.
The final Asset Browse Dialog will be similar to:
The transactions generated by these extra assets will post to the future ledger of the lease account in the normal way to reflect the correct future balance value.
When instalments post going forward they will be for the net amount of all assets associated with the lease.
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