IFRS16 Contract

Enter IFRS16 Contracts in the search.

The IFRS 16 Contracts list will open. On this page, click the New action to create a new contract.

On the General tab of the contract, the following fields are filled in:

1. Contract Number – transferred from the number series.

2. Contract Status – can be Pre-contract, Active, or Closed.

   • Pre-contract – the status of the contract before the schedule on the contract lines is confirmed.

   • Active – the status after schedule is confirmed and all due installments are posted.

   • Closed – automatically assigned when the last installment is posted.

3. Contract Date – enter the date the contract was signed with the leasing provider.

4. Contract Description – enter a short description of the contract.

5. External Contract No. – enter the contract number provided by the leasing provider.

6. Vendor No. – enter the code of the vendor with whom the contract was concluded.

7. Vendor Name – this field is not editable; it is automatically populated based on the entered vendor code.

8. Currency Code – a mandatory field, marked with an asterisk. After entering the currency, the contract lines become available, which consist of the schedules.

9. Contract Notes – a free text field for entering additional information if needed.

After entering the currency, the IFRS16 Schedule tab will become available. Then, click the New action, as shown in the image below.

By clicking New, the message will appear: Do you want to create a new schedule for the selected contract?

Clicking Yes opens the schedule for the given contract.

The Schedule page opens, where certain fields cannot be edited. These fields are Contract Number, Contract Date, Schedule Number, Version Number, Version Status, Vendor Number, Vendor Name, and Currency Code. Mandatory fields are marked with an asterisk.

General tab of the schedule

Fields marked with an asterisk are mandatory. These are: Installment Amount including VAT, Fixed Interest Rate, Lease Starting Period and Number of Payments. By entering the number of installments, the system will automatically calculate and fill in the contract end date.

The Lease Starting Date of the schedule can be in the middle or at the end of the month. In this case, even if the contract has, for example, 36 installments, the schedule will have 37 periods, because the first and last installments are calculated proportionally and together makeup one full installment.

Schedule Line

After filling in the required fields (Installment Amount including VAT, Fixed Interest Rate, Lease Starting Period, and Number of Payments), the system will automatically create the schedule lines. The General tab of the plan displays the Present Value (PV).

In the schedule lines, the following will be displayed: line number, period start date and period end date, principal amount, interest amount, monthly payment, as well as the closing balance. On line 1 of the Schedule, in addition to the calculated values, the present value is also displayed, which is the value of the fixed asset.

Exclude Interest First Payment

Exclude Interest from the First Payment is an option located on the General tab within the Schedule. When this option is enabled, the interest will not be calculated or displayed in the first installment during the schedule calculation. This is useful in situations where the schedule requires the first installment to include only the principal amount without any interest.

Creating a Fixed Asset from the Schedule

After entering all the required data, it is necessary to create the fixed asset, which is generated directly from the General tab of the Schedule. This is done by clicking the three dots next to the Fixed Asset No. field.

The fixed asset will be created according to the number series defined on the IFRS16 Setup page, along with the Depreciation Book Code and the FA Posting Group, which are also configured on the same page. The acquisition cost will not be displayed on the fixed asset until the Schedule is confirmed.

Confirming Schedule

Once you have verified that the schedule amount matches the plan provided by the leasing vendor, you can confirm the schedule by using the Confirm function.

After confirming the schedule:

1. The contract status changes from Pre-contract to Active.
2. The schedule version status changes from New to Active.

Contract image – Contract status ACTIVE.

Schedule image – Version status ACTIVE.

After confirming the schedule:

1. All fields on the schedule will be locked (they cannot be changed).
2. The General tab of the schedule displays the short-term and long-term liabilities.

Schedule image – General tab after confirming the contract (short-term and long-term liabilities).

3. The acquisition cost of the fixed asset will be automatically recorded on the fixed asset.

Fixed asset card image – after confirming the contract.

4. The Liability Term Type field on the schedule lines will be filled in with the values Short-term and Long-term.

Schedule lines image – short-term and long-term liabilities.

5. The Accruals Posted checkbox will be marked on the schedule lines.

Schedule lines image – Accruals Posted.

General Ledger entries after confirming the schedule - After confirming the schedule, the system automatically posts the acquisition cost of the fixed asset, as well as the short-term and long-term liabilities according. For each period, a separate posting line is created with a unique General Ledger Entry No.. Vendor entry numbers are important, as they are used later when posting due installments and closing liabilities.