10/17/2014 Lease Accounting - Overview - ERP Financials - SCN Wiki

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Added by Srinivas Hemadri, last edited by Nathan Genez on May 14, 2012
ERP Financials / / Lease Accounting
Lease Accounting - Overview
Purpose
Explain the concept and process of lease accounting in SAP, its integration with other modules and related configuration steps to set up Lease accounting. This write up is based on SAP version ECC 6.0.
Overview
Leasing is a type of Financing. There are two parties involved in a Leasing contract. One is Lessor and the other is Lessee.
Lessor is the one who owns the asset that is leased to someone else.
Lessee is the one who makes use of the asset but is not the owner of that leased asset.
There are two types of leases:
1. Operating Lease
2. Capital Lease
Under the operating lease, the asset remains on the lessor's books as an owned asset, and the lessor records depreciation expense over the life of the asset.
Under the capital lease, whether the leased asset is shown on the balance sheet of lessor or lesse is determined by several factors that will differ whether the lease is with or without purchasing option.
Lease accounting in SAP
Lease accounting component in SAP also referred as FI-LA can be used to process a lease. It enables automatic asset related postings in asset accounting module and contract related accrual posting in
General ledger module.
FI-LA has Lease accounting engine at its core which is also referred as LAE.It is integrated with CRM system to control and manage the entire transaction posting in FI-LA.
LAE automatically picks up the contract values through value IDs from the CRM contract when a new lease is created (NEWL) or if there is a process change (BLEX) in the CRM system, and classifies the
lease as operating lease or capital lease with or without purchase options.
It then makes necessary postings in asset accounting for asset creation and capitalization on the basis of customizing settings.
LAE also supports with parallel valuation of leased assets for both book depreciation and tax depreciation when accounting principles are assigned to the company codes for parallel accounting.
When there are process changes, LAE updates the asset accounting module with the details on lease extensions, terminations etc.
How FI-LA works in SAP
Once the lease contract is finalized, CRM billing generates Billing requirement items which can be selected via billing due list.
Taxes on lease can be calculated by integrating third party tax solutions like vertex etc by CRM applications transaction tax engine.
Contract accounts AR and AP components can be used to handle receivables and cash.
Netweaver Business warehouse solutions can be used for reporting on contract related information on leased assets.
Customizing settings
1. Assign Accounting principles to company code (Transaction: 0FILA006_1).
2. Create Company Code Grouping Key (Transaction: 0FILA008G_1).
3. Assign Company Code to the grouping key (Transaction: 0FILA008_1).
4. Assign interest calculation method to the company code (Transaction: 0FILAIRCM_1).
5. Specify Dates for Posting (Transaction: 0FILA009F_1).
6. Create Value IDs (Transaction: 0FILA003_13).
7. Transfer Value IDs from Contract Item (Transaction: 0FILA009V_1).
8. Transfer Values from Condition types (Transaction: 0FILA007_1).
9. Determine present value of reference value (Transaction: 0FILA003_3).
10. Complete mandatory settings in customizing (Transaction: 0FILAALOG_01)
SAP Help
lease accounting
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