Name: Understanding Lease-in Accounting According to IFRS16 - SAP S/4HANA Cloud Finance
Uploaded: 2021-1-29
Duration: 532 s
Description: This video provides an understanding of the RoU and liability posting, and how the system is connected with AP and asset depreciation. In addition, it explains how to realize IFRS 16 requirements in the system.

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<div>This video provides an understanding of the RoU and liability posting,  and how the system is connected with AP and asset depreciation. In  addition, it explains how to realize IFRS 16 requirements in the system.<br></div>

Understanding Lease-in Accounting According to IFRS16 - SAP S/4HANA Cloud Finance

Hello, welcome to OpenSAP Micro Learning. Today we are going to have a closer look at the Lease-in Accounting in SAP S4HANA Cloud. My name is Lan Feng. I am a FICO consultant in MEE Service Team. In this video, you will learn how to automate the Lease-in Contrast through SAP S4HANA Cloud. And the target audience would be application consultants and accountants. The agenda would be, first, we will have a closer look at the posting schema. I will explain the posting schema with an example. Second, I will show you the system demo. Ok, let's go to see the listing example. Assume that my listing contract lasts for 24 months, and I will pay it monthly in advance. Lease rate is 1000 euro. Interest rate is 3%. We will see the calculated right of use asset and calculated least liability amount in the screen. We do not need to calculate this ourselves. SAP S4HANA Cloud will calculate this for us. When we finish entering those information in SAP S4HANA Cloud and post valuation for the contract, the first posting will be the right of use asset capitalization. The system will debit the right of use asset account and credit asset clearing account. The second posting is the lease liability posting, which debits the asset clearing account and credits the lease liability account. The third posting is the interest expense posting, which debits the interest expense account and credits the lease liability account. The fourth posting is the monthly clearing posting, which debits the least liabilities account and credits the least clearing account. These four postings will happen when we post the valuation for the contracts. The list in accounting is integrated with account payable module. So we can use the app, pre-audit posting contracts, to post the supply invoice. After we run the app, the system will debit lease clearing and input tax account, credits when the reconsideration account. Later, you can run the automatic payment program to pay the supplier. Now let's look at the depreciation. The right-of-use asset will be depreciated together with the normal asset when we use the app Schedule Asset Accounting Job to run the depreciation. These are posting schema. Let's go to the SAP S4HANA Cloud System to replicate those postings. We open the app Manage Contract. We select the contract type List in Others. We enter the company code information and also contract name information. Then we go to the Partner tab. We select the business partner. We go to the terms tab and enter the contract start date and terms in months. For us, it's 24 months. And click enter, the system will automatically calculate the end of the contract days for us. Then we go to the tab objects to add an object. Now we enter the name for the contract object. Please be attention, the contract object name will be the name of the right-of-use asset. Then we select the object type and also the account assignment. Then we go to the Condition tab, and select the condition. This in rate machinery will be the condition that I would like to choose. Then I will enter the unit price. This is our monthly payment. Very important here is, I go to the turns tab and enter the organizational assignment. I enter the profit center and also functional area. In this app, the system will not automatically derive the profit center and also functional area. If you want the system to fill it automatically, you can contact your technical consultant to activate the body. Then we go to valuation parameter tab and select the valuation rule. For our demo here, we will choose the IFRS valuation rule. Then we need to put the interest rate here. As we see the rule is incomplete, we can click here to make the rule complete. We can also change the configuration to make the rule complete automatically. Now we go to the valuation tab and simulate the valuation. In the asset tab, we see the right-of-use asset value. In the depletion tab, we can see the asset depletion value. In the clearing tab, we can see our planned monthly payment. We can also see the interest situation in the interest tab. Everything looks fine. I will save my contract and also activate my contract. This is how I enter the contract information with the app manage contract. You can also use another Fiori base app, Contract Management, to create your contract information. Now we go to post the valuation for our contracts. We can select our contract here to post the valuation. Or we can go to Manage Contract app, go to Valuation tab and Post Valuation. We can first do a simulation of our contract valuation. We go to the Documents to see the simulation. As we see in the screen, there are four postings here. This is exactly the same in the posting schema. These are right of use asset capitalization posting, liability posting, monthly payment posting and interest posting. Everything looks fine. I can go back and do an update run. This is our posted document number. Now we will go to the app Pre-Audit Posting Contrast to post our supplier invoice. We can select our contract here. And do a simulation run, we go to documents to see our simulate document. Everything looks fine. I will go to update run to post my supplier invoice. The invoice is posted with this business partner number. This ends the system demo. Let's summarize the key learnings. Through this video, you should be able to understand how to realize IFR-X16 requirement in the SAP S4HANA Cloud system and how the system is connected with account payable and asset accounting module. This micro-learning video relates with the scope item 21p. Please check the Bex Pertis Explorer for details. Thank you and goodbye.