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Technical Note - October 2018

Technical Note - October 2018

08 octobre 2018

By Marie-Laure Navelot, Consultant & Consolidator Trainer for Amelkis

The Amelkis Lease solution is used to process contracts subject to IFRS16, as well as lease agreements submitted to CRC 99-02.

Operational levels

Contracts are attached to an operating level (Entity or BU) and therefore bear the currency of the entity. The functional levels are organized as follows:

- Group : this level makes it possible to group entities / BUs (for example, accountants, in case of data management for several clients). This level makes it possible to launch accounting or analysis orders for all related items (entities and BUs). No contract can be attached to a group.

- Entity : generally corresponds to the legal entity (term used in IFRS). It must be defined with a currency (known as the operating currency) and an annual closing date

- BU : corresponds to a subdivision of the entity. A BU can be attached to only one entity and an entity can have multiple BUs. A BU must be defined with a currency (known as the operating currency) and an annual closing date. Use: list the entity's contracts that are denominated in a currency other than the entity's operating currency; list the contracts attached to an institution, BU, or cost center, etc.

 

Contract management

Contracts are managed in two modes: Drafts or Signed. Only signed contracts give rise to the calculation of accounting by-laws. The draft mode makes it possible to make and store simulations.

When they are created, the contracts are first created in draft mode and then signed. Contracts can be signed "en masse". Contracts can also be created "en masse" by importing an excel file whose format is provided by the application.

3 documents can be attached to each contract (by importing a file in office format: doc, xls, ppt, pdf).

 

Leasing contract or lease financing at the start date

These contracts fall under the category "with implicit rate" according to IFRS 16. The information to be entered is as follows:

- Contract Code
- Name of the contract
- Description of the contract
- Type of financed property (proposed list - we can create new categories if needed)
- Operational level of attachment
- Start date of the contract
- Frequency of payment (monthly, quarterly, annual)
- Duration of the contract in number of months
- Amortization period of the underlying asset (since it can be measured in accordance with IAS 16)
- Amount financed
- Amount of periodic rent
- Amount of the 1st rent plus
- Residual value

The software calculates the implicit rate of the contract, generates the debt repayment schedule and the amortization table of the asset and immediately carries out all impact calculations for the entire duration of the contract, year by year. Calculations can be exported in excel format.

 

"Simple" rental agreement at the start date

These contracts fall under the category "without implicit rate" according to IFRS 16, ie the contracts at the end of which the property must be returned to its owner. The information to be entered is as follows:

- Contract Code
- Name of the contract
- Description of the contract
- Type of financed property (proposed list - we can create new categories if needed)
- Operational level of attachment
- Start date of the contract
- Frequency of payment (monthly, quarterly, annual)
- Duration of the contract in number of months
- The rent
- Discount rate

The software calculates the amount of debt and financial charges. The software immediately carries out all impact calculations for the full duration of the contract, year by year (depending on the closing date of the entity or BU). Calculations can be exported in excel format.

 

Events after the start date

In accordance with the recommendations of IFRS 16, any event impacting the contract is treated on the date of occurrence of the event. Our analysis of the standard on this point led us to group the six possible events into the following four categories:

  1. Termination before the expiry
  2. Modification of the duration
  3. Change in the probable exercise of the call option
  4. Modification of future rents
  5. Decrease of user fees and related rents
  6. Addition of new user rights and related rents

When an event occurs on a current contract, the user is asked to indicate the date of occurrence of the event and to fill in the additional information required for updating the calculations. The software checks the consistency of dates as events are entered. The calculations are updated immediately and returned until the end of the contract, year by year.

 

Accounting Orders

The user has the possibility to generate all the required accounting by-laws and to export them to excel. The accounting decree of an entity carries that of the BU which are attached to it. It is possible to select accounting statements for a Group (this selects all the entities / BUs attached to it).

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