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My Favorite PeopleSoft Lease Administration Transactions, Part II

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Hello again everyone! Welcome to Part II in the blog series, “My Favorite PeopleSoft Lease Administration Transactions.” In Part I, we looked at amending a multi-asset lease to remove an asset. In this installment, we will look at a lease with quarterly payments. We will also review how Lease Administration creates straight-line accounting entries. Additionally, my analysis will cover all the journal entries for this lease over its entire life span. This is essentially an end-to-end look at this lease. Without any further introductions, let’s jump right in!

For this example, the lease data included:

  • Lease Term – 01/01/2019 – 12/31/2019
  • Payments – $12,000 per quarter on Jan 1st, Apr 1st, Jul 1st and Oct 1st
  • No escalations
  • Borrowing rate – 3%
  • PVLP and ROU Capitalized Cost $47,113.32

In order to best illustrate the accounting entries for this lease, I set up the lease length for just one year. We will look at the accounting for the entire year. Though this lease is only for one year, the straight-line principles for this lease will apply to any lease with a similar payment stream regardless of length. Since the lease payments are quarterly, the timing for the straight-line accounting entries will repeat every quarter.

Here are screen shots from the General Information and Financial Terms:

The Payment Schedule page including each of the four quarterly payments and the obligation reduction for each payment are shown below:

Next, we have the straight-line amounts which automatically adjust the straight-line expense across all 12 months of the lease. With 4 payments of $12,000, the total is $48,000 over the life of the lease. Then divide $48,000 by the length of the lease (12 months), and we have a straight-line expense of $4,000 per month. So for every quarter, we have 1 month with a $12,000 expense payment and 2 months without any payment. To average out our expenses over each quarter, the adjustments would be (8,000), 4,000 and 4,000 for each month respectively in that quarter (as shown below by PeopleSoft on the straight-line adjustment page). Remember, all the straight-line amounts were calculated automatically. I am just using the manual straight-line page below since it details the adjustments for each month.

Looking at the months of January, April, July & October, we have the $12,000 payment which will be expensed. For those months, we have a deferred amount of ($8,000) which will give us a net expense of $4,000. For all the other months that do not have a payment, we have an accrued amount of 4,000 (giving those months $4,000 of expense as well).

As I said, this page gives a very good snapshot of the straight-line amounts, and it is downloadable to Excel.

Now, let’s move on to the journal entries which can be viewed directly from the lease or from Asset Management via the Asset ID. For the purpose of this blog, I have consolidated the all journal entries from the entire life of the lease onto a spreadsheet. I have also grouped them by purpose. Again, remember all these journal entries are automatically created by PeopleSoft. No manual intervention is required.

For reference, here are the accounts that we will use for this lease:

First, we have the add journal entries from Asset Management that were created when the lease was activated.  The amounts here tie to the ROU/PVLP amounts.

Second, we have obligation & ROU reduction journal entries from Asset Management for each quarter. These amounts tie to the obligation reduction column from the payment schedule

Here are the journal entries to record the lease payments and lease expense:

These are generated by Asset Management. The credit offset is to the Lease Clearing account which in turn is cleared out when the payment vouchers are created in Accounts Payable.

As mentioned above, when the payment vouchers are created in Accounts Payable, account 2010 is cleared out. The payment will be in Accounts Payable until it is paid. Again, all these journal entries are automated.

Next, we have our monthly straight-line journal entries from asset management.

These amounts tie to the straight-line schedule shown above and average the lease expense to $4,000 per month.

Lastly, I have consolidated all the journal entries into T-accounts to get a better visual on how the account balances work over time during the life of the lease. The only journal entries that I did not include were the payments which would have been a debit to Accounts Payable and a credit to Cash.

In closing, I find this lease an excellent example of Lease Administration functionality. The product’s ability to automate all these journal entries is why this is one of my favorite lease transactions. No manual intervention was required at all to create these entries. Also, the automated principles shown here apply equally to leases with built-in escalation clauses also requiring straight-line adjustments. In this blog, I discussed all the journal entries on an end-to-end basis for this lease so that you may verify the results on your own as well.

As always, thank you for reading and be sure to read my next installment in this series & our other Lease Administration Blogs.

Steven Brenner, CPA
Senior Principal Consultant
MIPRO Consulting

Ideas for MOSC – My Oracle Support Community

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I have an idea! But what should I do with it? Ideas. We all have them. Some of them end up as customizations to our software. Others end up as simply dreams. But some lucky thoughts may end up on the MOSC – My Oracle Support Community. Ultimately, they may even end up as part of the delivered functionality. To find the space, to see what ideas are out there, or to add your own, CLICK HERE!

If you haven’t had an opportunity to check out the hundreds of active ideas, you really owe it to yourself to give it some attention. You can vote up or down on a specific idea that someone else has offered. You can even add your own!

Here are a few new ideas (along with their links) for the Maintenance Management module (my favorite). You might find them helpful for your account, or they may get your creative juices flowing so you can add your own.

Click on any of the links to find out more about these and other great ideas.

PM Schedule Mass Update – Add the new Employee ID and Crew fields

Allow Mobile Tech’s Quick Work Order to be configured to flow directly to Schedules, rather than Requirements

Allow users to enter Procurement / Inventory using the My Tasks tile within Mobile Tech

Limit the # of search results on Mobile Tech. System prone to freezing

Valid Dispensing UOM on Inventory on WO

Rolling date setup for Open By task Date tile

ANSI standard acknowledgement codes are missing in PeopleSoft for 855s

“View Only” Maintenance Security Role

Service Request Notes to be transferred to Work Order

Add “Unassigned” check box option on other Workbench views

On Hand Parts & Costing for Work Orders

PM Schedule – Auto Update Last Reviewed Activity

Resource Lines on Time Entry

Include Description on Parent WO Lookup

If you have questions, or would like information about the PeopleSoft Maintenance Management module, or any other PeopleSoft product, please contact Robin Cole at robin.cole@miproconsulting.com or Larry Zagata at larry.zagata@miproconsulting.com. To read more about MIPRO Consulting, click here.

Customizations May Not Be Taboo Anymore

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Recently, I met with a customer who was considering implementing a new PeopleSoft module. The attendees included a functional executive, several of her managers, and two IT managers. At the beginning of the meeting, the executive announced that no matter what was decided, she did not want any customizations to the software. Generally, history and […]

My Favorite PeopleSoft Lease Administration Transactions, Part I

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Welcome! I would like to introduce my next blog series, “My Favorite PeopleSoft Lease Administration Transactions.” With the new accounting rules taking effect this year, I’ve had plenty of opportunity to work with PeopleSoft Lease Administration using PUM 27 to 30 (especially PUM’s 28 to 30 over the past six months). As a consultant and […]

Supplier Scorecard

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The enhanced Supplier Scorecard feature was delivered in FSCM PUM Image 29. It is now possible to define and incorporate Key Performance Indicator (KPI) questions and Weighted Scores into templates and evaluations for a supplier. This enhancement allows you to view and analyze objective and subjective questions with a completed Supplier Evaluation Scorecard. You can […]

2019 Sources of PeopleSoft Info and Networking

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It might surprise you that organizations are still selecting PeopleSoft as a brand-new solution for their financials, supply chain, and human resources system. These “net new customers” choose PeopleSoft over other options to replace their current ERP systems. Personally, I am aware of two in the last thirty days. The PeopleSoft community continues to be […]

Simple Journal

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A new Journal Entry feature in Fluid was delivered in FSCM PUM Image 29 called Simple Journal. Through configuration, this feature allows customers to restrict and control the fields displayed on the Fluid Journal page. These setting are based on the need or function of the user. It simplifies the data entry from an end-user […]

Planning to implement your ASC842/IFRS 16 lease accounting solution in 2019? PeopleSoft can help!

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Since 2019 is now upon us, some organizations have already implemented PeopleSoft Lease Administration. Some are in the final stages for go-live preparation. Some organizations have not yet started to implement a solution and are targeting 2019 to do so. The good news is that PeopleSoft has you covered regardless of your project go-live target […]

It’s still not too late to implement PeopleSoft Lease Administration for January 1, 2019 and be ready for the new ASC 842 & IFRS 16 accounting rules!

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I would like to remind everyone that the deadline for compliance with the new ASC 842 & IFRS 16 rules is fast approaching. My headline is a bold statement, but it can hold true if you can answer yes to the following questions: Have you already identified all your leases, including the payment schedules? Do […]

How to Get Rid of Stress While on a Business Trip

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Feel stressed out while traveling? You aren’t alone. Learning to get rid of stress is essential when traveling. According to a study by CWT Travel Solutions Group (CWT), the top three triggers for stress when traveling can be grouped into three main areas: 1. Lost Time. It’s difficult, or downright impossible, to get work done while traveling, especially […]

Administering Simplified Analytics Video

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Two weeks ago, we published a blog on administering simplified analytics. To watch a video demonstrating how to create a simplified analytic and make it available to the end user on a Fluid tile, click here or on the photo below: Additionally, if you would like more information on simplified analytics, please email me at Larry.zagata@miproconsulting.com. To read […]