Terminating a lease

You can terminate existing active leases.

Procedure

  1. Open an existing active lease and click Terminate.
  2. On the Contract Terminate form, set the Termination Effective Date and Termination Comment in the General section.
    Termination Effective Date Description/Steps
    After the start date of the current open period If the Termination Effective Date is after the start date of the current open period of the Business Unit if a business unit is selected on the lease or the Termination Effective Date is after current fiscal calendar based on today's date, an attention message appear with the information that this is not considered as Termination, rather a modification. See Making amendments to a lease.
    Not on the last day of the past or current open fiscal period (partial period)

    If the Termination Effective Date is not on the last day of the past or current open fiscal period (partial period), the Payment for Partial Period? Field on the Details section will be visible. Three options are available, Full Payment, No Payment, or Prorated Payment.

    If No Payment or Prorated Payment is selected, the Accounting Type for Prorated or No Payment field will be visible. This is to set the prorated last payment to either be Accounts Payable (AP) or Accounts Receivable (AR). IBM® TRIRIGA® will use the same Pro Rata Basis that is set on the payment schedule of that payment to calculate the prorated amount.

    Same as the Accounting Start Date

    If the Termination Effective Date is the same as the Accounting Start Date, the Reverse All Liability and Asset Values field will be visible.

    1. Enable the Reverse All Liability and Asset Values check box. This is to revert the whole liability and asset value.
  3. If Termination Penalty is required, enable the Charge Termination Penalty? check box.
  4. Enter the Termination Fee amount.
  5. Select a Due Date for the Termination Fee payment. By default, it is set to today's date.
  6. The Void payments after termination date? field is set to Yes as default. Change it to No if that is the preferred option.
  7. Review all the information and then click Continue.
    The lease is closed and processing starts.

Results

Once the processing is completed, the lease is no longer an Active lease and its status is updated to Terminated. If the Termination Fee amount is entered, a One-Time payment line item will be created with the Payment Type as Termination Fee on the due date selected. This can be seen on the Payments tab > Payments subtab.
Important: Termination Fee will not be included in the Accounting schedule, but it will be created as part of Termination journal entry. If the last payment is prorated, the last fiscal period of the accounting schedule will be re-calculated. The lease event JEs will be created along with a draft lease event contract summary balance record. It stores the functional currency amounts of lease event JEs for the current open period. The contract summary balance record can be accessed on the Contract Summary Balance section of the History tab of a lease.