Oracle FinancialsCloud

Implementing Lease Accounting

20D

Oracle Financials CloudImplementing Lease Accounting

20DPart Number F34514-01Copyright © 2011, 2020, Oracle and/or its affiliates.

Author: Mathew Daniel

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Oracle Financials CloudImplementing Lease Accounting

Contents

Preface i

1 Getting Started with Your Lease Accounting Implementation 1Overview of Lease Accounting Implementation ..................................................................................................................... 1

Enable Lease Accounting Feature ............................................................................................................................................. 1

Enable Create Property and Equipment Lease Feature ........................................................................................................ 1

Security Tasks You Might Need to Perform ............................................................................................................................ 2

Manage Data Security Policies ................................................................................................................................................... 2

Manage Duties ............................................................................................................................................................................... 2

2 Security - Job Roles, Duties, and Privileges 3Assign Job Roles for Lease Accounting Users ....................................................................................................................... 3

Assign Duty Roles for Lease Accounting Users ..................................................................................................................... 3

Assign Privileges for Lease Accounting Users ....................................................................................................................... 3

3 Implementation Tasks 5Roadmap for Setting Up ............................................................................................................................................................. 5

Set Up Payables Financials Option ........................................................................................................................................... 5

Lease Accounting Setups ............................................................................................................................................................ 5

Import Primary Discount Rate Indexes .................................................................................................................................... 7

Import Payment Term Templates .............................................................................................................................................. 8

Set Up General Ledger Calendars ............................................................................................................................................. 9

Set Up Payables Suppliers And Sites ....................................................................................................................................... 9

Set Up Document Sequencing ................................................................................................................................................... 9

Set Up Currency Conversions .................................................................................................................................................... 9

Set Up Payment Terms ................................................................................................................................................................ 9

Set Up Inventory Organizations ................................................................................................................................................ 9

Set Up Master Item List .............................................................................................................................................................. 9

Oracle Financials CloudImplementing Lease Accounting

Oracle Financials CloudImplementing Lease Accounting

Preface

i

PrefaceThis preface introduces information sources that can help you use the application.

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Oracle Financials CloudImplementing Lease Accounting

Preface

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Oracle Financials CloudImplementing Lease Accounting

Chapter 1Getting Started with Your Lease Accounting

Implementation

1

1 Getting Started with Your Lease AccountingImplementation

Overview of Lease Accounting ImplementationThe Lease Accounting implementation is a straightforward process through which you can set up the following features:

• Payables Financial Options

• System Options

• Primary Discount Rate Indexes

• Payment Term Templates

• General Ledger Calendars

• Account Payables Suppliers and Sites

• Document Sequencing

• Currency Conversions

• Payment Terms

• Inventory Organizations

• Master Item List

• Business Functions

Enable Lease Accounting FeatureLease Accounting is currently under the Financials functional area. The Create Property and Equipment Lease feature isoffered under Financials.

Enable Create Property and Equipment Lease FeatureYou can create and maintain property and equipment leases using the "Create Property and Equipment Lease" featurein Lease Accounting. It's a "Customer Must Take Action before Use by End Users," which means it's delivered disabled,and you must use the opt in method to enable this feature.

To access its setup tasks:

1. From the Navigator, select Setup and Maintenance.2. On the Setup: page, select Financial > Lease Accounting from the drop-down list.3. Click Change Feature Opt In.4. Select the check box in the Enable column for the Create Property and Equipment Leases feature.5. Click Done.

Oracle Financials CloudImplementing Lease Accounting

Chapter 1Getting Started with Your Lease Accounting

Implementation

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Note: A new task, Manage Lease Accounting Configuration is seeded for the setups.

Security Tasks You Might Need to PerformThese are some of the security tasks you might need to do:

• Manage Data Security Policies

• Manage Duties

For more information, refer to My Oracle Support Knowledge Document 1387777.1, Getting Started with Oracle FusionApplications, Common Implementation.

Manage Data Security PoliciesThe following data security function should be entered for your roles in the security console for the Manage LeaseContract Data and Generate Amortization Schedule Data privileges:

The setup of this feature is through the Financial Application Administrator.

Create Data Security Policy using Tools > Security > Roles

• Policy Name: Enter a name for the policy.

• Start Date: Enter the start date of the policy.

• Data Resource: Select the business unit.

• Data Set: Select by Instance Set.

• Action: Access the business units for which the user is explicitly authorized.

New data access privileges are created which can be assigned through the data security policy.

Manage DutiesA new duty called Lease Contract Duty is seeded for Lease Accounting.

This needs to be assigned to the user created by the implementor for carrying out lease duties of lease creation andamortization generation.

The Financial Application Administrator has been enhanced with the privilege to add Lease Accounting setups throughFSM.

You can access the Create Property and Equipment Leases functionality using the Lease Contract duty.

You must create a new job role "Manage Lease Contract" using this duty.

Oracle Financials CloudImplementing Lease Accounting

Chapter 2Security - Job Roles, Duties, and Privileges

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2 Security - Job Roles, Duties, and Privileges

Assign Job Roles for Lease Accounting UsersThis table gives the job roles of a Lease Accounting user.

Role Role Code Description

Financial Application Administrator

ORA_ FUN_ FINANCIAL_ APPLICATION_ADMINISTRATOR_ JOB

Individual responsible for creating,managing, and approving leaseaccounting users.

Assign Duty Roles for Lease Accounting UsersThis table gives the duty roles of a Lease Accounting user.

Name Code Description

Lease Contract Duty

ORA_ FLA_ LEASE_ CONTRACT_DUTY

Manage leases. Generate amortizations schedule.

For information, see:

• Role-Based Access Control, Oracle Fusion Applications Understanding Security guide

Assign Privileges for Lease Accounting UsersThis table gives the privileges that Lease Accounting users require to perform various functions.

Privilege Code Description Assigned to Duty Role

Manage Lease Configuration

FLA_ MANAGE_CONFIGURATION

Allows viewing andconfiguration of lease setups.

Financial ApplicationAdministrator

Manage Lease Contract

FLA_ MANAGE_ CONTRACT

Allows viewing andconfiguration of lease setups.

Lease Contract Duty

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Chapter 2Security - Job Roles, Duties, and Privileges

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Privilege Code Description Assigned to Duty Role

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Chapter 3Implementation Tasks

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3 Implementation Tasks

Roadmap for Setting UpUse this roadmap as the high-level procedure to implement lease accounting.

• Payables Financial Options

• System Options

• Primary Discount Rate Indexes

• Payment Term Templates

• General Ledger Calendars

• Account Payables Suppliers and Sites

• Document Sequencing

• Currency Conversions

• Payment Terms

• Inventory Organizations

• Master Item List

Set Up Payables Financials OptionYou must set up the Payables Financials Options before setting up the system options.

Lease Accounting SetupsYou must use the following steps for Lease Accounting Setups upload:

1. Login using user role: Financial Application Administrator.2. Select Financials > Financials > Task: Manage Lease Accounting Configuration.3. From Actions > Export to CSV.4. Create New > Check Export only Template files.5. Submit > Download files from Ready for Download.6. Unzip the downloaded file to get 6 setup files (5 .csv) files.7. Fill all the mandatory data in the .csv files. Compile all the 6 files into a zipped file.8. Go to Actions > Import Setup Data from CSV file.9. Browse for the zipped file and Click Submit to create the setup data.

The following are the CSV files:

• ORA_FLA_DISCOUNT_INDEX_RATES_csv

• ORA_FLA_DISCOUNT_INDEX_INDEXES_csv

• ORA_FLA_PAYMENT_TEMPLATE_ACCOUNTS_csv

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• ORA_FLA_PAYMENT_TEMPLATE_csv

• ORA_FLA_SYSTEM_OPTIONS_csv

You can use the information in these files to upload System Options, Payment Term Templates, and Discount RateIndexes.

Note: Even though you're, for example, uploading only the System Options, the input zipped file must contain all thesix files (five .csv and one .xml).

You can use the same infrastructure to upload multiple objects for setups such as 6 or 10 different discount rate indexes.

You can update the setups by exporting the setup data and then making changes and re-importing the zipped file.

Note: This task only supports FSM file uploads.

System Options

You must provide the following information among other attributes:

• OrgName: The business unit name.

• AmortizationMethod: The frequency of the amortization.

• LedgerName: The ledger identifier in the General Ledger.

• PrimaryRegime: The primary accounting standard. The valid options are IFRS16 and ASC842.

• SecondaryRegime: The secondary accounting standard. If primary is IFRS16, then secondary will be ASC842, ifboth accounting standards are applicable for reporting, and vice-versa.

• Interest CalculationMethod: The interest calculation method

• DefaultCurrencyConvType: The currency conversion type.

• CalendarName: The name of the GL calendar.

• ItemMasterOrgName: The inventory item master identifier.

• AutoAssetNumberFlg: The identifier to enable auto numbering of the asset.

• AutoLeaseNumberFlg: The identifier to enable auto numbering of the lease.

• SecondaryLedgerName: The name of the secondary ledger.

Note: Only those business units for which AP Financial options are complete can be used for creating leaseaccounting setups.

Note: Leases can't be created for those business units for which the system options aren't defined.

Discount Rate Indexes

You must provide the following information among other attributes for the discount rate lines:

• Name: The discount rate index name.

• BusinessUnit: The business unit name.

• RateValue: The discount rate value for the effective dates.

• EffectiveStartDate: The effective start date of the discount rate line.

• FinalFlagDisp: The identifier to activate the discount rate index.

You can provide multiple discount rates within the same CSV file if the dates aren't over-lapping each other and are in asequential order.

Payment Term Templates

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Chapter 3Implementation Tasks

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You must provide the following primary information among other attributes for the payment term template:

• Name: The name of the payment term template.

• Description: The description of the payment term template.

• BuName: The business unit name.

• PaymentFrequencyCodeDisp: The frequency of the payment. The valid values are Daily, Monthly, Quarterly, orAnnually.

• IntercompanyFlagDisp: The identifier to mark Intercompany transactions.

• LiabilityFlagDisp: The identifier to enable Liability.

• RouAssetFlagDisp: The identifier to enable right-of-use.

• PaymentPurposeCodeDisp: The name of the payment purpose.

• PaymentTypeCodeDisp: The name of the payment type.

• VendorIdDisp: The name of the supplier.

• VendorSiteIdDisp: The site of the supplier.

• OptionFlagDisp: The identifier to mark the option payment template.

• OptionTypeCodeDisp: The type of option.

You must provide the following information from the FLA_LEASE_ACCOUNT_CLASS lookup among other attributes forthe payment term template accounts:

• AccountDetailNumber: The unique account detail number used in the payment term template.

• AcccountClassCodeDisp: The account class of the account in this distribution.

• LedgerName: The GL identifier associated with the payment term template.

• CCIdSegment: The identifier of code combination.

Import Primary Discount Rate IndexesYou must setup the primary discount rate index using FSM file upload or by setting up using the Manage LeaseAccounting Configuration task.

You must have Financial Application Administrator access.

You can now set up the primary discount rate indexes using the following setup steps:

• Click Setup and Maintenance.

• Select Financials.

• Click Lease Accounting functional area.

• Click Mange Lease Accounting Configuration task.

• Click Required Tasks and select search discount rate index.

Discount Rate Index setup does the following:

• Captures Cost of Funds

• Discount rate are used in PV calculations

• Amortization start date is used for calculations

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• Associated to the lease for applying discount rate

• Activate the index for lease use.

• Provides appropriate name and description for categorizing indexes.

You can include the following attributes in a discount rate index:

• Business Unit

• Index Name

• Effective From Date

• Description

• Discount Rate

• Final - Yes or No

Import Payment Term TemplatesYou can setup payment term templates using FSM file upload or by setting up using the Manage Lease AccountingConfiguration task..

You must have Financial Application Administrator access.

You can now set up the payment term template using the following setup steps:

• Click Setup and Maintenance.

• Select Financials.

• Click Lease Accounting functional area.

• Click Mange Lease Accounting Configuration task.

• Click Required Tasks and select search payment templates.

Payment Term Template setup does the following:

• Captures payment default values

• Accelerate payment creation

• Create error-free payments

• Implement financial policies onto payments consistently.

• Drive calculation option of balances for ROU, Liability, and Expenses

You can include the following attributes in a payment term template:

• Business Unit

• Template Name

• Active - Yes or No

• Description

• Payment Purpose

• Payment Type

• Payment Frequency

• Supplier Name

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• Supplier Number

• Supplier Site

• Payment Term

Set Up General Ledger CalendarsYou must configure the GL calendars to enable selection of accounting dates for leases.

For daily calculations, set up the GL calendar as per your business needs such as 4-4-5.

Set Up Payables Suppliers And SitesYou must set up the Payables supplier and supplier site information to complete the payment information in the leases.

Set Up Document SequencingYou must setup document sequencing to leverage the auto-numbering functionality of lease objects such as leases,assets, and payments.

You can setup document sequencing through: Task > Manage Document Sequences and completing the followingsteps:

• Create a new sequence.

• Associate the new sequence to "Lease Accounting Lease Sequence Category."

• Associate the new sequence to the business unit.

Set Up Currency ConversionsYou must configure the currency information to enable the selection of currency for payment information in the lease.

Set Up Payment TermsYou must set up the payment terms after setting up the payment term templates.

Set Up Inventory OrganizationsYou must set up the inventory organizations to enable selection of the assets.

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Set Up Master Item ListYou must set up the master item list to enable the selection of asset items.