Financial Settings Tab - Manage Company

The settings in this section pertain to cash and amortization.

• Straight Line Cash Amortize Method: Select the appropriate option for how you would like the system to calculate the amortization of Cash Rent in Straight Line schedules.

  There are four options: Per Day, Per Period, Day Of, and Per Day Monthly.

  The Per Day Monthly method is most applicable to when you are using a 13-period fiscal calendar. This method is broken down into the following steps:

  1. The daily rent for each month is calculated.

  2. The total number of days in the period is calculated.

  3. The number of days from the first month in the period are calculated.

  4. If there is a second month in the period, the number of days from the second month are calculated.

  5. The daily rent of the first month is multiplied against the number of days from the first month.

  6. The daily rent of the second month is multiplied against the number of days from the second month.

  7. The two values calculated in step 5 and 6 are added to determine the total rent in the fiscal period.

  The Per Day Monthly method is only accessible if you have the enablePerDayMonthlyCashAmortization feature enabled. Contact Support if you would like to utilize this feature.

• ASC 842 / IFRS 16 Asset Amortize Method: Select the appropriate option for how you want the system to calculate the amortization of Assets in Straight Line schedules.

  There are two options: Per Day, and Per Period. By Period distributes the amortization equally among periods, and Per Day distributes the amortization according to the number of days in the period.

  Note:

  This setting impacts only ASC 842 Finance leases.

• Expense Amortize Method: Select the appropriate option for how you would like the system to calculate the amortization of Rent Expense in Straight Line schedules.

  There are two options: Per Day, and Per Period.

• Short-Term/Long-Term Liability Calculation Method: Select the appropriate option for how you would like the system to calculate your short-term and long-term liability.

  There are two options: Liability Amortization Based, and PV Based. By default, the setting is set to Liability Amortization Based.

  If you set the setting to PV Based and save your changes, a dialog box will open. A message in the dialog box reads, Changing this setting will alter the values of 12-Month Forward Change in Liability Balance in ASC 842 and IFRS 16 accounting schedules. Do you want to continue?

  Once the PV Based setting is applied, upon schedule calculation the 12-Month Forward Change in Liability Balance will be calculated using the following formula:

  

  Where PV(n)—the present value of cash for period n—equals:

  

  • n: the period

  • C(n): cash for period n

  • D: annual discount rate

  • P: the number of periods in the fiscal year

• Pro-rate partial first/last periods (for period based calculations)based on 28 days (multiplier = 1 for 28-35 day intervals, #days / 28 if #days < 28): Select the Yes option if you would like to prorate partial first and last periods based on a 28-day multiplier. This setting only impacts values calculated per period. If you have a partial period that is greater than or equal to 28 days, it will be considered a whole period by the system and will not prorate.

• Match Lease and Fiscal Year Ends: Select the Yes option if you want to match the lease and fiscal year ends, and the No option if you do not.

  • If you select Yes, the system calculates the Straight Line Schedule up to the fiscal year end.

    For example, if the lease ends on December 31st but the fiscal year ends on December 29th, the schedule would end on the 29th.

  • If you select No, the system calculates the Straight Line Schedule to the end of the lease.

    For example, if the lease ends on December 31st but the fiscal year ends on December 29th, the system would calculate a partial period of 2 days.

The settings in this section pertain to your lease accounting.

• Topic 842 Adoption Date: Enter the date your firm adopted the ASC 842 Lease Accounting Standard.

  You can also click Calendar to open the Date Picker and select the appropriate date.

  This date impacts how the system calculates your Accounting Begin Date for ASC 842 schedules. For more information, see the Lease Accounting Rules and Logic in Lucernex page.

  Note:

  Once the adoption date has passed, our best practice recommendation is to clear these fields to prevent excessive overwriting.

• Do one of the following:

  • (IFRS firms only) IFRS 16 Adoption Date: Enter the date your firm adopted the IFRS 16 Lease Accounting Standard.

    You can also click Calendar to open the Date Picker and select the appropriate date.

    This date impacts how the system calculates your Accounting Begin Date for IFRS 16 schedules. For more information, see the Lease Accounting Rules and Logic in Lucernex page.

  • (GASB firms only) GASB 87 Adoption Date: Enter the date your firm adopted the GASB 87 Lease Accounting Standard.

    You can also click Calendar to open the Date Picker and select the appropriate date.

    This date impacts how the system calculates your Accounting Begin Date for GASB 87 schedules. For more information, see the Lease Accounting Rules and Logic in Lucernex page.

    Note:

    Once the adoption date has passed, our best practice recommendation is to clear these fields to prevent excessive overwriting.

• Firm Level Discount Rate: Enter the default discount rate for your company here. The discount rate is also known as the Interest Rate or Internal Borrower Rate (IBR). To enter a discount rate, enter the number—no % or decimal is necessary.

  This is your firm-level discount rate. You can also set a discount rate at the portfolio-level and the contract-level.

  The value in this field is used as the discount rate for generating the net present value of the lease liability that will be placed in the balance sheet as both an asset and a liability.

  Note:

  System Administrators have the ability to create custom list layouts for their for the Approve Payments window. To learn how to create a custom list layout for this window, see our Create a List Layout for the Approve Payments window article.

• Current Fair Value Threshold: Enter the fraction of the fair value of the underlying asset that you would like to test against to determine whether to treat this lease as a financing- / purchase-type lease or an operating lease. This value is usually set to 90%.

  This field is used in the ASC 842 Test.

• Current Remaining Economic Life Threshold: Enter the fraction of the economic life of the underlying asset that amounts to “a major part” of the scheduled accounting period. This value is usually set to 75%.

  This field is used in the ASC 842 Test.

• Accounting Method Schedule Default: Select the default accounting method you want to use for ASC 842 schedules from this field.

  This default accounting method will auto-populate in the Create New ASC 842 Rent Schedule window for RE Contracts and Equipment Contracts that do not have a locked ASC 842 Test.

• Allow Schedules in Posted Periods: Select Yes if you want to enable the Late Amendment functionality.

  Late amendment catch-up scenarios for modifications occur when the effective date of a new lease or lease modification is in a period prior to the current open period. Because previous periods are already closed, the system will generate catch-up entries to true up the current period balances to what they should have been if amendment had been input in a prior effective period. These catch-up adjustments not only true up the current period but also allow for the ongoing accounting to be correct.

  Learn more about Late Amendments.

• Restrict Accounting Schedule Approver: By default, a user with sufficient permissions can edit the Approved? field on any accounting schedule, even if they were the person who had created or last modified the record. If you enable the Restrict Accounting Schedule Approver setting:

  1. A user cannot approve accounting schedules where:

     1. The user created the schedule, OR

     2. The user triggered the Recalc? flag on the schedule.

  2. A user can approve accounting schedules where the above conditions are false.

  3. These settings apply to accounting schedules for RE Contracts, Equipment Contracts, and Assets.

  If this setting is enabled and the user is viewing an accounting schedule where the conditions in #1 are true, the Approved check box is disabled.

  This setting is not enabled by default. If your company uses the System Administrator Login as Member functionality, the System Administrator is currently able to bypass this setting.

• If you have a 13-period fiscal year, select the month that you want to associate with two fiscal periods for percentage rent accruals from the Percent Rent Month to associate with 2 Fiscal Periods for Percent Rent Accruals field.

The settings in this section pertain to the Percentage Rent sub-modules in the Contract module.

• Percent Rent Accrual Test Method: Select the test method you want Lucernex to use from the Percent Rent Accrual Test Method field.

  Your test method is what you will use to determine if you need to set aside funds for percent rent.

  To learn more about the available Percent Rent Accrual Test Methods, see the Percent Rent Accrual Method Settings page.

• Percent Rent Accrual Calculation Method: Select the calculation method you want Lucernex to use from the Percent Rent Accrual Calculation Method field.

  Your calculation method is what you use to determine your accruals, once you have determined that you need to accrue.

  To learn more about the available Percent Rent Accrual Calculation Methods, see the Percent Rent Accrual Method Settings page.

• Enable Sales Data Encryption: By default, the system encrypts sales data. This setting is enabled because sales data is typically viewed as sensitive data. Select the No option to disable sales data encryption.

  Note:

  If there is a change to the Enable Sales Data Encryption setting, the system displays the number of records encrypted or decrypted.

  This setting controls both sales and use based rent data.

The settings in this section pertain to defaults and page layouts used in the Contract and Equipment Contract modules.

• Prevent Generate Rent for RE Contracts Before: Enter the date prior to which the system should not generate rent for real estate contracts.

  You can also click Calendar to open the Date Picker and select the appropriate date.

• RE Contract Payment Approval Levels: To create approval levels for real estate contract payments:

  1. Click Enabled below the RE Contract Payment Approval Levels label.

  2. Enter the number of approval levels you want to create in the field to the right of the Enabled.

  3. Configure the approval levels of your approvers on the Manage Members / Contacts page.

• RE Contract Generate Rent Layout: Select the list layout you want to use for multi-selecting contracts in the RE Contract Generate Rent window from this field.

  All page layouts with a table association of Transaction will appear in this field. Unless you have created a custom approval layout, do not change the default setting of this field.

• RE Contract Transaction Approval Layout: Select the list layout you want to use for transactions in the Real Estate Contract Approve Payments window from the field.

  All page layouts with a table association of Transaction will appear in this field. Unless you have created a custom approval layout, do not change the default setting of this field.

• RE Contract Expense Schedule Approval Layout: Select the list layout you want to use for expense schedules in the Real Estate Contract Approve Payments window from the field.

  All page layouts with a table association of Expense Schedule will appear in this field. Unless you have created a custom approval layout, do not change the default setting of this field.

• Prevent Generate Payment for Equipment Contracts Before: Enter the date prior to which the system should not generate payments for equipment contracts.

  You can also click Calendar to open the Date Picker and select the appropriate date.

• Equipment Contract Payment Approval Levels: To create approval levels for equipment contract payments:

  1. Click Enabled below the Equipment Contract Payment Approval Levels label.

  2. Enter the number of approval levels you want to create in the field to the right of the Enabled.

  3. Configure the approval levels of your approvers on the Manage Members / Contacts page.

• Equipment Contract Generate Rent Layout: Select the list layout you want to use for multi-selecting contracts in the Equipment Contract Generate Rent window from this field.

• Equipment Contract Transaction Approval Layout: Select the list layout you want to use for transactions in the Equipment Contract Approve Payments window from this field.

  All page layouts with a table association of Transaction will appear in this field. Unless you have created a custom approval layout, do not change the default setting of this field.

• Equipment Contract Expense Schedule Approval Layout: Select the list layout you want to use for expense schedules in the Equipment Contract Approve Payments window from the field.

  All page layouts with a table association of Expense Schedule will appear in this field. Unless you have created a custom approval layout, do not change the default setting of this field.

The settings in this section pertain to revaluation and translation:

• Home Currency: Select the default currency for your firm from this field.

  If you do not select a currency from this field, its value will default to USD.

• For the New Rate at / on setting, choose between two options:

  • Commencement: The rate equals the Cash (Spot) rate that is closest to but not before lease commencement.

  • Schedule Begin: The rate equals the Cash (Spot) rate that is closest to but not before the Schedule Begin Date.

• Select the appropriate values from the following fields in the Revaluation section:

  These are the currency conversion types used for contracts in need of revaluation. You must use the Manage Exchange Rates feature for this mapping to work.

  Setting	Definition	Default Type	Affected Fields
  Liability Balance	the foreign exchange rate type you want to use for your liability balance conversions	Cash (rate at end of the month used)	SLPeriod.LiabilityAmount SLSummary.CurrentLiabilityBalance SLSummary.Forward12MonthLiabilityChange
  Cash Expenses	the foreign exchange rate type you want to use for your cash expense conversions	Period Average	SLPeriod.PeriodCashAmount
  Asset Amortization	the foreign exchange rate type you want to use for your asset amortization conversions	Cash (rate at begin of the month used. This value is fixed—it does not change over the life of the lease unless the schedule is remeasured.)	SLPeriod.PeriodAssetAmortizationExpense
  Asset Balance	the foreign exchange rate type you want to use for your asset balance conversions	Cash (rate at begin of the month used. This value is fixed—it does not change over the life of the lease unless the schedule is remeasured.)	SLPeriod.AssetAmount
  Interest	the foreign exchange rate type you want to use for your interest conversions	Period-Average	SLPeriod.PeriodInterestAmount
  Single Lease	the foreign exchange rate type you want to use for your single lease expense conversions	Period-Average	SLPeriod.PeriodExpenseAmount
  Liability Amortization	the foreign exchange rate type you want to use for your liability amortization expense conversions	Period-Average	SLPeriod.PeriodLiabilityAmortizationExpense

• Select the appropriate values from the following fields in the Translation section:

  These are the currency conversion types used for contracts in need of translation. You must use the Manage Exchange Rates feature for this mapping to work.

  Setting	Definition	Default Type	Affected Fields
  Liability Balance	the foreign exchange rate type you want to use for your liability balance conversions	Cash (rate at end of the month used. This value can vary by period.)	SLPeriod.LiabilityAmount SLSummary.CurrentLiabilityBalance SLSummary.Forward12MonthLiabilityChange
  Cash Expenses	the foreign exchange rate type you want to use for your cash expense conversions	Period-Average	SLPeriod.PeriodCashAmount
  Asset Amortization	the foreign exchange rate type you want to use for your asset amortization conversions	Period-Average	SLPeriod.PeriodAssetAmortizationExpense
  Asset Balance	the foreign exchange rate type you want to use for your asset balance conversions	Cash (rate at end of the month used. This value can vary by period.)	SLPeriod.AssetAmount
  Interest	the foreign exchange rate type you want to use for your interest conversions	Period-Average	SLPeriod.PeriodInterestAmount
  Single Lease	the foreign exchange rate type you want to use for your single lease expense conversions	Period-Average	SLPeriod.PeriodExpenseAmount
  Liability Amortization	the foreign exchange rate type you want to use for your liability amortization expense conversions	Period-Average	SLPeriod.PeriodLiabilityAmortizationExpense