Exercising adoption options

You can adopt the new standard either by running the adoption process in IBM® Maximo® Real Estate and Facilities or by transitioning existing leases using carryover amounts. The choice between these options depends on the Accounting Start Date of the lease.

If you want to keep the Accounting Start Date before the Lookback Period and/or Adoption Period, it means you want to use ASC840 and ASC842, or IAS17 and IFRS16 in Maximo Real Estate and Facilities. Therefore, to transition your lease, you will have to go with Option 1, running the adoption process in Maximo Real Estate and Facilities.

However, if you want to set the Accounting Start Date to be on or after the Lookback Period and/or Adoption Period, this means that you want to use ASC842 or IFRS16 alone in Maximo Real Estate and Facilities. Therefore, you will perform Option 2, transitioning existing leases using carryover amounts.

Option 1: Running the adoption process in Maximo Real Estate and Facilities

Procedure

  1. Go to Contracts > Leases > Related Links - Contract Leases > Review Lease Assumptions, and click Add.
    The Bulk Create Review Assumptions Request form opens.
  2. On the Review section, select Schedule To Process and enter Review Comments.
  3. Click Create.
  4. On the Lease Filters section, enter any of the fields and click Apply Filter to filter some leases.
    The filtered leases will be displayed on the Leases section.
  5. To select a certain lease click Find on the Leases section. On the pop-up form, select leases and click OK.
  6. Once all the leases that need to run the adoption process are filtered in the Leases section, click Save.
  7. Select all the leases under Leases section and click Create Review Assumption.
    Note: An Assumption Audit Log is created for each of the selected leases. These will be listed under the Review Assumption Items section.
  8. Click Submit.
    The Bulk Create Review Assumptions Request record is closed. When the status is changed to Completed, those leases are transitioned to the new standard. On those leases, Standard Adopted is checked, The Adoption Date, Look Back Date and Modification Effective Date are updated.

Option 2: Transitioning existing leases using carryover amounts

Procedure

  1. On the Home portal, go to My Lease Reviews section. The list of leases that are assigned to you is displayed. Or, go to Contracts > Leases landing page > Leases > under RE Contracts of Related Links section and search for a specific lease.
  2. Open a lease and go to the Accounting tab, set Accounting Start Date and Accounting End Date if the defaulted values are not correct.
  3. Enter Initial Liability Carryover Balance. This is deferred rent from ASC840 or IAS17 Operating lease at the ending period prior to the Accounting Start Date.
  4. Enter IFRS Liability Carryover Balance and IFRS Asset Carryover Balance ONLY if the lease is IAS17 Finance lease. The amounts are the liability and asset at the ending period prior to the Accounting Start Date.
    Note: The Initial Liability Carryover Balance amount is used to adjust the asset value of ASC842 or IFRS16. For IFRS Liability Carryover Balance and IFRS Asset Carryover Balance, the NPV and asset for IFRS16 will begin with the entered/carryover amounts.

Accounting review for a new GASB lease

About this task

As GASB is a new standard in Maximo Real Estate and Facilities, all GASB leases must be created with a new accounting standard only i.e. GASB 87. There will not be any Lease treatment to maintain the old standard information like how it is done for GAAP/IFRS standard. For GASB 96 Subscription Based IT Arrangement (SBITA), there will be no Standard Adoption process. Follow these steps while performing an Accounting Review for a new GASB lease and its transitioning to GASB 87.

Procedure

  1. Go to Accounting > GASB Classification and set the following:
    • Set Is the lease being newly adopted to GASB 87? to TRUE.
    • Set Is the lease Operating or Capital under the old standard? to either Operating or Capital.

    • If the lease is Capital in the old standard, set the Carrying Value of Lease Asset and Lease Liability. If the lease is Operating, set the Initial Liability Carryover Balance with any deferred rent payments if there are any.

    • For GASB 87 Lessor Lease: If the lease is Capital in old standard, set the Carrying Value Of Deferred Inflow of Resources and Carrying Value of Lease Receivable. If the lease is Operating, set the Initial Asset Carryover Balance (IACB) and it will be subtracted form Current Deferred Inflow of Resources Value.
  2. Click Calculate Lease Classification.
    The Adoption Date is updated with GASB adoption Period and the modification effective date is updated with GASB Lookback period from the Application Settings.
  3. Click Generate Accounting Schedules.
  4. After the lease is back to Revision Accounting In Review, a lease accountant must review the accounting schedules and if everything is good, click Activate.
    Note: For GASB 96 Subscription Based IT Arrangement (SBITA), there will be no Standard Adoption process.