Dynamics 365

Finance – Asset

leasing

Avinash KesaniSr. Engineering lead

Mohamed AamerSr. Program manager

Agenda Asset leasing capabilities

Lease classification test

Asset leasing components

Asset leasing scenarios

Demo

Microsoft Dynamics 365 Finance – Asset leasing

Lease administration Leased assets

Potential values

AutomationFinance Integration

• Complies with accounting

standards IFRS 16 and ASC 842

• Dual currency converts lease transaction currency to

accounting and reporting currency, complies with IAS 21

• Dual reporting to post lease transactions to different layers

• Adjustments and index revaluation

• Automates lease

classification tests (finance, operating, low-value or short-term lease)

• Automates lease complex

calculations of present value and subsequent measurements

• Lease accounting entry

generation

• Company chart of

accounts

• Fixed assets

• Accounts payable

• Financial dimensions

• Data entities import and export

Controls

• Audit controls over lease

data and posted transactions

• Segregation of duties for lease creation and lease

transactions postings

Business outcomes

• Lease reports covering commencement, movements, forecast and disclosure notes

• Streamline lease business process of lease creation, classification and posting• Increase productivity by automating complex lease calculation and the lease administration team can focus on busines decisions

Balance

sheet

IFRS 16

ASC 842

Income

statement

IFRS 16

ASC 842

Lease classification test

Finance leaseOperating lease

Transfer of ownership

Purchase option

Lease term

Present value

Unique asset

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

Exceeds low-value threshold

No

Exceeds short-term threshold

Low-value lease Short-term lease

Yes

Yes

No

$$$

$$$ $$$

$$$ $$$

$$$$$$

$$$

$$$ $$$

Lease classification test

Lease

Payment schedule

PeriodsPayment

amountMonth

Lease Contract

Management decision

Dynamics 365 Finance

Asset fair value Asset useful l ife

Incremental borrowing rate

Implicit rate

Payment schedule lines

Commencement date

Payment frequency

Compounding intervals

Lease term (months)

Period interval

Start date

End date

Annuity type

Periods

BooksAccounting framework

IFRS 16 US GAAP

Lease type

Operating Finance Automatic

Threshold

Lease termPresent

valueShort term Low va lue

Present value

Lease book

Lease classification and transaction

Dr. ROU asset

Cr. Lease l iability

US G

AA

P

Initial recognition

IFRS

Dr. Lease expense

Cr. Payment clearing

Dr . Lease expense

Cr. Payment clearing

US G

AA

P

Interest expense

Dr . Interest expense

Cr. Lease l iability

Lease payment

Dr . Interest expense

Cr. Lease l iability

Dr. Lease l iability

Cr. Payment clearing

Dr. Lease l iability

Cr. Payment clearing

Dr. ROU asset

Cr. Lease l iability

Operating lease

Finance lease

Depreciation

Dr. Dep. expense

Cr. Acc.Dep

Dr. Dep. expense

Cr. Acc.Dep

US G

AA

P

Short term/ Low value lease

IFRS

Dr. ROU asset

Cr. Lease l iability

Dr . Lease expense

Cr. Lease l iability

Dr. Lease l iability

Cr. Payment clearing Cr. Acc.Dep

Dr . Lease expense

Lessee Lessor

Asset

Initial recognition

Monthly transactions

Lease liability amortization

Lease depreciation

Accrued lease

payment

Lease adjustment

Lease impairment

Lease agreement Lease calculation and accounting standards Lease transactions

IFRS GAAP

IFRS : International Financial and Reporting StandardsGAAP : Generally Accepted Accounting Principals

Fixed assets

General ledger

Accounts payable

Present value

Lease payment schedule

Lease classification test

Finance lease

Operating lease

Short term lease

Lease data

Payments

Contract

Management decision Low value

lease

Asse

t leasin

g mo

du

le

Books

Vendor invoice

ClearingLedger

account

Account payable

Bank

Payment

Asset leasing

Fixed assets

Initial recognition

Lease liability

amortization

Lease depreciation

Ledger accounts

Acquisition

Depreciation

Lease payment

Create lease Create schedules

Confirm schedule

Calculates present value

Classification test

Asse

t leasin

g jou

rnal

Fixed assets – Asset leasing integration

Asset leasing journal

Lease ID

Initial recognition

Voucher transactions

General ledger

Asset leasing journal

Lease adjustment

Lease payment

Liability amortization (interest)

Lease expense

Asset depreciation

Impairment

Asset transactionsInitial recognition

Adjustment

Fixed assets

Acquisition

Depreciation

Asset ID

Acquisition

Adjustment

Asset ID

Asset ID

Asset ID

Asset depreciation

Impairment

Asset transactionsInitial recognition

Adjustment

Asset leasing

Dynamics 365 Finance

Data management Asset leasing

Data Import Destination table

Staging table

• Lease staging

• Payment contract staging

• Executory contract staging

Lease import framework

Demo

Dynamics 365 Finance – Asset leasing

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Q & A

Asset leasing GA on 10.0.14 (Nov 2020)

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