Balance Sheet Lessee Accounting

With the advent of FASB and ISAB standards IFRS 16 and ASC 842, respectively, companies must now track leased assets and report long-term lease liabilities on their balance sheet. For more information about each standard, or to determine the criteria for balance sheet vs expense accounting, please review the FASB and IASB standards. To accommodate these requirements, JD Edwards has released new Lessee Balance Sheet Accounting functionality for 9.1 and 9.2. For customers running 9.0 and older releases, no new functionality is planned. However, see Doc ID 2420929.1 for some suggestions on how to leverage standard JDE functionality for Lease Accounting.

Key dates:

  • For public entities, the standards go into effect for annual periods beginning after 12/15/18 (i.e., 1/1/2019).
  • For all other entities, the standard begins for annual periods beginning after 12/15/19 (i.e., 1/1/2020).
  • Early adoption is permitted for all entities.

So, now you know that Oracle has delivered enhancements, and you know the deadlines for implementation. But where do you go next? Preparing for the new Lessee Accounting requirements can be daunting, but we’re here to help. Before you begin your setup tasks, some things to consider:

  1. Are your leases Property or Non-Property leases? Both types are supported, but the setup is a little different for each. Take some time to gather and review your schedule of leases, and categorize each as Property or Non-Property.
  2. Do you want to align your Non-Property lease assets with the same categories as your regular Fixed Assets? If so, take the time to assign cat codes to your leased assets ahead of time. If not, consider creating new category codes to identify leased assets separately.
  3. Will you calculate and remit lease payments via AP through the Lessee Accounting functionality, or do you want to handle AP payments for leases separately/manually?
  4. What bill codes/charge classes do you require for Lessee Accounting? Consider all facets of a lease, such as initial direct costs, fees, actual rent, etc., then be sure to set up a Bill Code for each.
  5. Consider how to account for leases that are already mid-life. Will you enter Journal Entries for these, or will you allow the Lease Commencement process to create the entries? Adjustments may be required.

To get started, download our Initial Setup document for Balance Sheet Lessee Accounting, which covers initial setup, along with next steps and helpful Oracle links.