Ifrs 16 Simulation

Period 1 2
Lease Payment ( year payment in arrears) $11,000 $12,000

PV value Interest factor 6% 0.9434 0.89
Present Value Lease Payment $10,377.40 $10,680.00
Asset 1 2
RoU Asset Value $31,972.20
Depreciation ( 31,972.20/3) $10,657.40 $10,657.40
Residual value of RoU Asset $21,314.80 $10,657.40
Liability 1 2
Liability Value $31,972.20
Interest repayment 6% ( RVEP*.06) $1,918.33 $1,373.43
Repayment ( Lease payment – Interest) $9,081.67 $10,626.57
Residual value at End of Period-RVEP (Ex: Y1: 31,972.20-Interest) $22,890.53 $12,263.96
Balance sheet: Right of Use Asset (Reconciliation account –Asset)
Asset Clearing
Lease Clearing
Lease Liabilities
Lease Creditor (Reconciliation account – Vendor)
Profit and Loss: Interest Paid
Depreciation
Lease Expense
SAP Postings expected from the new lease accounting process:
At the time of entering the new lease contact and activate it in the
system it will post in RoU asset (capitalized) and post against the
leased liability.
1. A. Asset Value to clearing
Dr RoU Asset (B/S) $31,972.20

Cr Asset Clearing (B/S) $31,972.20
B. Clearing to Liability
Dr Asset Clearing (B/S) $31,972.20
Cr Lease Liability (B/S) $31,972.20
2. Interest Posting against the lease liability form the RE-FX monthly
posting run
Dr Interest Paid (P/L) $1,918. 33
Cr Lease Liability (B/S) $1,918. 33
3. Depreciation Posting
Dr Depreciation (P/L) $10,657.40
Cr Acc. Depreciation (B/S) $10,657.40
4. Rent Payment posting, this will decrease the remaining lease liability
which is posting against the lease clearing account.
Dr Lease Liability (B/S) $11,000.00
Cr Lease clearing (B/S) $11,000.00
Dr Lease clearing (B/S) $11,000.00
Cr Lease Creditor (B/S) $11,000.00
How the solution delivers form SAP RE-FX
SAP Real Estate Management solution for lease accounting is a

functional extension of SAP Real Estate Management. It is based on
contact and includes the following functions.
Contract objects for lease contracts

Definition and assignment of valuation rules for contract conditions
Mass maintenance transaction for creating and changing valuation
rules
Valuation run and valuation postings (including simulation and
cancelation).
Configuration Requirement:
1. For operational lease assets, it is recommended to create the new

lease contract in SAP RE, for this purpose, first contact valuation
need to get activated using CE01 to use the functions for the balance
sheet valuation according to IFRS.
2. Define the customization setting for valuation process. (Valuation
principle, valuation rule, account determination, ect.)
3. Integration settings with SAP FI, CO and AA.
The SAP RE-FX module also enables to add ‘Statistical Conditions’ to

contract valuation. The use of those in the light of balance sheet
valuation of lease contracts is for recording initial costs incurred before
the contract start, such as broker fees or installation costs.
When recorded as a statistical condition, those costs are considered for

the calculation of the RoU-asset value even though the invoice is
already posted in accounting in the regular accounts payable flow and
thus has no influence on the future lease liability.
Implementation Strategy
1. If business is currently using the real estate (RE) new functionality

can be used additionally.
2. SAP Note: 2255555 valuations for leasing contacts
3. If business is currently in ECC system SAP RE-FX can implement

in the current system and later can be migrated to the SAP S/4
HANA. SAP Note: 2254013 SAP Real Estate for S/4 HANA
4. If company is already in the S/4 HANA platform, then it’s only need
to implement the SAP RE-FX.
Note: When searching for SAP notes for lease accounting search SAP
component RE-FX-LA
Workaround solution if not implementing the SAP RE-FX
Configure new asset class for RoU Assets – Eg: ZRoU
Asset account determination (assign Reconciliation account,

depreciation, accumulated depreciation, ect..)
Asset depreciation key based on the depreciation method. Eg:
Straight-line
Post operation lease information in new asset class (RoU) after

calculating the present value (PV) of the lease manually.
Post Lease Liability value (G/L Posting)
Execute depreciation run (AFAB) on Lease assets (RoU) at the
month end to post the depreciation.
Manually calculated Interest can be posted periodically (G/L Posting

Lease payment to vendor.
For the workaround solution lot of manual intervention required. All the
calculations to derive present value of the lease, interest and
recalculation if there is any changes to be done manually.
Therefore, it is not recommended going for workaround if company has

quite a lot of lease contracts.
3 Total
$13,000 $36,000
0.8396
$10,914.80 $31,972.20
3 Total
$10,657.40 $31,972.20
$0.00
3 Total
$735.84 $4,027.60
$12,264.16 $31,972.20
$0
Periode
Year 1 2 3
Payment 11 13 15
Interest Payment 1 2 3
RoU Asset Payment 10 11 12
Asset Value
Dr RoU Asset (B/S - Asset) 33000
Cr Asset Clearing (B/S) 33000
Liability
Dr Asset Clearing (B/S) 33000
Dr Lease Liability (B/S - Liability) 33000
1 2 3
Interest Dr Interest expense 1000 2000 3000
Dr Lease Liabiity (B/S - Liability) 1000 2000 3000
Depresiasi Dr Biaya Depresiasi (P/L) 11000 11000 11000

Cr Acc Depresiasi (B/S - Asset) 11000 11000 11000
Rent Patment Posting Dr Lease Liability (B/S - liability) 11000 13000 15000
CR Lease Clearing (B/S) 11000 13000 15000
Dr Lease Clearing (B/S) 11000 13000 15000

Cr Lease Ceaditor (B/S - AP) 11000 13000 15000
39
6
33
33000
6000
39000

Ifrs 16 Simulation

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Period 1 2

Lease Payment ( year payment in arrears) $11,000 $12,000

Balance sheet: Right of Use Asset (Reconciliation account –Asset)

Lease Creditor (Reconciliation account – Vendor)

Profit and Loss: Interest Paid

SAP Postings expected from the new lease accounting process:

1. A. Asset Value to clearing

Dr RoU Asset (B/S) $31,972.20

Dr Asset Clearing (B/S) $31,972.20

Cr Lease Liability (B/S) $31,972.20

Dr Interest Paid (P/L) $1,918. 33

Cr Lease Liability (B/S) $1,918. 33

Dr Depreciation (P/L) $10,657.40

Cr Acc. Depreciation (B/S) $10,657.40

Dr Lease Liability (B/S) $11,000.00

Cr Lease clearing (B/S) $11,000.00

Dr Lease clearing (B/S) $11,000.00

Cr Lease Creditor (B/S) $11,000.00

How the solution delivers form SAP RE-FX

SAP Real Estate Management solution for lease accounting is a

Contract objects for lease contracts

1. For operational lease assets, it is recommended to create the new

The SAP RE-FX module also enables to add ‘Statistical Conditions’ to

When recorded as a statistical condition, those costs are considered for

1. If business is currently using the real estate (RE) new functionality

3. If business is currently in ECC system SAP RE-FX can implement

Workaround solution if not implementing the SAP RE-FX

Configure new asset class for RoU Assets – Eg: ZRoU

Asset account determination (assign Reconciliation account,

Post operation lease information in new asset class (RoU) after

Manually calculated Interest can be posted periodically (G/L Posting

Therefore, it is not recommended going for workaround if company has

Depresiasi Dr Biaya Depresiasi (P/L) 11000 11000 11000

Dr Lease Clearing (B/S) 11000 13000 15000

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