United States Department of Transportation

1. United States Department of Transportation Leased Assets

2. Introduction • Multi-Org set-up • Multiple Set of Books • Multiple Asset Books (Corporate only) • Patch Level 11i FA.F or higher • Examples are shown in 11.5.8

3. Creating Lease Details • N ® Setup ® Asset System ® Leases ® Lease Details • New with 11i FA.F are the following fields: • Lessor • Lessor Site • Payment Account • Payment Terms • The Lessor Site determines the Book for the Payment Account field

4. Creating Lease Details (continued) • From the lease agreement determine whether the lease is an operating lease or a capital lease. • A Lease should be Capitalized if the term of the lease exceeds 75% of the economic life of the leased asset or if the minimum lease payments exceeds 90% of the fair market value of the leased asset.

5. Capitalization Test • The Capitalization Test – in accordance with the Financial Accounting Standards Board (FASB) – will capitalize and depreciate leased assets if any one of the following criteria is met: • Ownership of the asset transfers • A bargain purchase option exists • Term of lease is more than 75% of economic life of the asset • Present Value of the minimum lease payments exceeds 90% of fair market value of the asset at lease inception

6. Capitalization Test (continued) • The results of the Capitalization Test will display in the Test Result field. If the lease qualifies for capitalization, the Cost to Capitalize field automatically displays the amount that is the lesser of the fair market value of that asset or the present value of the minimum lease payments. This amount is also displayed as the current cost of the asset in the Books window when the asset is added

7. Attach Payment Schedules • N ® Setup ® Asset System ® Leases ® Lease Details • Payment Schedules can be attached in two ways: Either by attaching a previously defined payment schedule or by creating a new one: • Note:  Once the schedule is attached, it cannot be changed

8. Attach Payment Schedules (continued) • To create or view a payment schedule: • Select the Payment Schedule button on the Lease Details screen to open the Lease Payments window

9. Creating a Lease Payment Schedule • N ® Setup ® Asset System ® Leases ® Lease Payments • In the Lease Payments window, enter a unique Payment Schedule name • The Lease Date must be the 1st of the month • The Present value or the Amount filed must be entered. • Select the View Amortization button in the Lease Payments screen

10. Creating an Amortization Schedule • N ® Setup ® Asset System ® Leases ® Lease Payments ® View Amortization • View the payments, interest and reduction in Principal over the life of the lease

11. Leased Asset Category • N ® Setup ® Asset System® Asset Categories • The Category Type must be Lease in order to enable the Lease Number field on the Asset Details screen

12. Creating a Leased Asset • N ® Assets ® Asset Workbench • In the Fixed Assets window, select New button. • In the Asset Details window, the Asset Category selected will determine the Asset Type, and enable the Lease Number field.

13. Add the Lease to the Leased Asset • N ® Assets ® Asset Workbench • In the Asset Details window: • Lease Number Description (defaults from the Lease Number selected) • Lessor (defaults from the Lease Number selected)

14. Export Lease Payments to Payables • N ® Setup ® Asset System ® Leases ® Leases Payments to Payables • Enter selection criteria to find the lease payments and select the Find button to open the Export Lease Payments to Payables window

15. Export Lease Payments to Payables (continued) • Verify the information for each lease payment, including: • Lessor Site • Payment Account • Payment Terms • Select payments for export, by: • Individually selecting the Export checkbox, or, • Select All Records, from the Edit menu

16. Export Lease Payments to Payables (continued) • Select the Export button to interface lease payments to Payables.

17. Export Lease Payments to Payables (continued) • Review the log file for the status of payments exported.

18. Lessons Learned • Security by book does not apply to lease screens without customizing • If lease payments are selected for multiple books, the export will select all payments with a queue of post regardless of Book • Testing found that the Mass Additions form will allow operating leases to be assigned to capital categories • AP requires supplier sites to be pay sites, the Lessor site allows purchasing sites to be selected. (patch available)

19. Leased Assets – Q&A • Q&A: Contact Information: Jean.Matzke@FAA.DOT.gov (405)954-6926