The Cycle Accruals update [U0301] is used to accrue or reverse accruals interactively for a lease. There is also the option to accrue for a selection of leases or for all leases in the entire LeasePak system. All leases selected are accrued to their current point, as determined by the system based on the current date. "Catch-up" accruals are performed if the lease has missed more than one accrual. Selected leases that are already current are not accrued. Therefore, a lease is never accrued past its current point, regardless of the number of times the Accrual option is selected for the lease.
The Cycle Accruals update is normally automatically run during the End of Period process [U04] according to predefined cycles. These cycles are specified through the Predefined Cycles Customizations option of the Portfolio update [U0212].
Cycle Accruals may also be performed interactively, without affecting the normal End of Period operation (if the leases are already accrued from the interactive update, the Exception report will list them as such). The update can be accessed through the LeasePak Update menu, Predefined Cycle option or by entering U0301 into the Fast Menu <F2>.
Cycle Accrual processing can not be applied to leases in non-accrual status.
The accrual process performs the following functions:
Note: Use tax is calculated based upon the current tax payment code and location of the asset. Incorrect use tax may be calculated if the location and/ or tax payment code is changed during the period for which the accrual process is performed.
Note: The Accounts Receivable (RAR) file contains fields which make it possible to prorate sales tax for partial payments. These fields (PRIN_STAX_C and INT_STAX_C) are automatically set to Y if sales tax is due for an item. If a partial payment of a taxable item is received, LeasePak calculates the portion of the payment which should be applied to sales tax. Thus sales tax receipts correspond closely to taxable gross receipts.
Note: LeasePak may cause a $0.01 difference for IDC/IDR’s on some IBL’s when an accrual, accrual reversal and a re-accrual is performed.
Note: LeasePak may cause a $0.01 difference for IDC/IDR’s when the amortized IDC/IDR is reversed.
Four reports are produced by the Accrual option of the Cycle Accruals update [U0301]:
The Accrual Reversal option of the Cycle Accruals update [U0301] reverses the accrual process for a specific lease. For example, one use of the Accrual Reversal option occurs when adding an asset to a lease as of a past date. In this process, the accruals for the lease are reversed to the date the asset is to be added, then the asset is added using the Asset Add-on update [U0113], and the lease is re-accrued using the Accrual option of the Cycle Accrual update [U0301].
Another example of the use of the Accrual Reversal option is payment reschedule for a lease as of a past date. In this process, accruals for the lease are reversed to the date of the payment reschedule, then the payments are rescheduled using the Payment Reschedule update [U0104], and the lease is re-accrued using the Accrual option of the Cycle Accrual update [U0301].
No reports are produced by the Accrual Reversal option of the Cycle Accruals update [U0301].
Note: Use tax is calculated based upon the current tax payment code and/or location of the asset. Incorrect use tax may be calculated if the location and/or tax payment code is changed during the period for which the accrual reversal process is performed.
If a previous payment schedule adjustment has been done, such as through the Asset Payoff/Termination options of the Payoff update [U0103], the Payment Reschedule update [U0104], or the Asset Add-on update [U0113], and accruals are reversed to before the date of the schedule change, incorrect income may be reversed.
LeasePak will allow for Multiple Due Day changes to be made to a lease via the Payment Due Day Change [U0118] update when the MULTI DUE DAY CHANGE RESTRICTION field is set to ‘Y’. Every time the Due Date is changed, the final payment day will change, based on certain lease criteria. There will be no restriction on the number of times the Due Date can be changed throughout the life of the lease. An edit check will be in place so as to not allow a Due Date Change for more than 25 days per occurrence.
Also, the entire amount of recurring charges on the invoice(s) to reverse is waived. This includes any recurring charge amounts which may have been manually assessed.
The accrual cycle serves 2 functions:
All possible payment due days are established in the accrual cycle through the Predefined Cycles Customizations option of the Portfolio update [U0212]. Lease payments may be due only on a valid payment due day. Payment due days also trigger the accrual process during the End of Period process [U04].
The date on which any particular lease is accrued is based on 3 factors:
Late charge grace days at the lease level (established through the Book Lease option of the New Lease update [U0101]) is not used in accrual cycle calculations. It is used in late charge calculations only.
To determine the day on which a lease accrues:
For example, assume that the accrual cycle is set up for the first, fifth, tenth, fifteenth, twentieth and twenty-fifth days of the month. A lease billed in advance with a payment due date of February 10 will accrue income for the February 10 payment on January 10 with an accrual deferral period of zero days, January 15 with an accrual deferral period of 5 days, or January 20 with an accrual deferral period of 10 days.
Note: LT method leases do not accrue until the due day of the payment plus grace days has past.
Note: With the 1994 JULE Fund the first accrual period may be longer than subsequent accrual periods for level yield leases billed monthly in arrears and for fixed rate IBLs using the principal and interest accrual method billed in arrears. This is accomplished by coding Y in the LEASE DATE AFFECTS YIELD switch in the New Lease screen of Portfolio update [U0212]. The first accrual period then begins on the lease date, earlier than the commencement date. Yield is reduced.
Note: For IBL’s with Capitalized Interest set to ‘I’, LeasePak will calculate interest on the interest that is paid after the due date.
When the Accrual option of the Cycle Accruals update [U0301] is executed interactively, a specific range of payment due days is selected by the user; all leases with a payment due day on or between the specified start and end days are accrued.
When Cycle Accruals is executed through the End of Period process [U04], the accrual process computes the range of payment due days, based on the current date and the last End of Period Cycle Accrual. The start day for the range is the previous cycle accrual’s end day plus one. The end day for the range is the current day. All leases with a payment due day on or between the calculated start and end days are accrued for payments due the following month.
This screen is used to select the Cycle Accruals update [U0301] option.
This screen is used to select a lease or group of leases to accrue.
This screen is used to select the range of payment due days for the lease or group of leases to accrue.
The values in the START DAY and END DAY fields are initially defaulted to include all possible payment due days (1 through 31), but may be changed to produce a narrower range. If only leases with a particular payment due day are to be accrued, both START DAY and END DAY may be set to the same value.
The Cycle Accrual Audit report [U0301A] reports at the lease level and provides the following income accrual information for each precomputed interest lease accrued:
Note: If more than one month is accrued, each month’s income accrual is shown on a separate line, up to a maximum of 10 months. If more than 10 months are accrued, the first 9 months’ income accruals are shown and the remaining accruals are accumulated in the tenth line.
NET PAYMENT
+ USE TAX
+ OTHER ASSESSMENTS
Note: When the Vehicle Finance module is purchased, LeasePak UX will display the IDC/IDRs totals.
Note: When accruals or accrual reversals are being run for the first time with the new IDC/IDRs, the first lease with IDC/IDR fees may be $0.01 less than the amortization schedule generated. The penny difference will be recognized when all IDC/IDR’s are fully amortized.
The Cycle Accrual Audit report [U0301B] reports at the lease level and provides the following income accrual information for each simple interest lease accrued:
For example, assume on January 1 the accrual process executes for payments due on February 1, and the interest accrued for the period of January 1 through January 31 is $100 based on a projected base rate of 10%. On February 1, the actual base rate for the period of January 1 through January 31 is 9%, which results in an actual interest amount of $90. The interest adjustment displayed for the period is $10.
PRINCIPAL ACCRUED
+ INCOME DUE
+ OTHER ASSESSMENTS+
PRINCIPAL RECEIV (LT method only)
+ BILLED PRIN RECV (LT method only)
The Cycle Accrual Audit report [U0301C] reports at the lease level and provides
the following income accrual information for each operating lease accrued:
LEASED ASSETS
- ACCUMULATED DEPRECIATION
NET PAYMENT
+ USE TAX
+ OTHER ASSESSMENTS
The Cycle Accrual Exception report [U0301D] reports at the lease level and displays messages on the status of accrual processing.
ACCRUAL TYPES ARE NOT ALL APR
If one lessor, vendor, or investor accrual method for a lease is AAPR or RAPR, then all accrual methods must be of that type. This message indicates a data error. Notify your client services representative at MSI.BASE RATES DO NOT EXIST FOR THE LEASE
This message is used for floating rate interest accruals only. It means that no record was found on the Base Rates (RPR) file for the base rate code for the lease. Reconfirm base rate code for the lease through the Master Financial update [U0202] and the base rates on the Base Rates (RPR) file through the Base Rates update [U0705].ERROR ENCOUNTERED DURING USE TAX ACCRUAL
Use tax could not be accrued for the lease because:
The record(s) on the Asset (REQ) file could not be found for the lease. This message indicates a possible data error. In this case, notify your client services representative at MSI.
The record(s) on the Location (RLO) file could not be found for the lease. It is likely that the location record(s) were deleted through the Location update [U0701]. In this case, assess the use tax manually through the Assessment update [U0105], and re-add the location to the Location (DLO) file using the Location update [U0701] or change the location of the asset through the Asset update [U0210].
ERROR IN NEXT PAYMENT DUE DATE. PLEASE NOTIFY MCCUE SYSTEMS INC.
The next payment due date for the lease is not correct. This message indicates a data error. Notify your client services representative at MSI.ERROR LIMIT (10,000) REACHED. PROCESSING HALTED.
The maximum number of messages and/or errors (10,000) has been reached. Leases after the Portfolio/Company/Region/Office/Lease number shown on the report were not accrued, and should be accrued interactively using this update. If an invoicing run was also performed, the invoices for the unaccrued leases do not show any payments scheduled to be accrued by this cycle. Therefore, invoices should be regenerated using the Cycle Invoices update [U0302] once the leases are interactively accrued.GENERAL LEDGER RECORD DOES NOT EXIST FOR THE OFFICE
The record for the office of the lease was not found on the General Ledger (RGL) file. This message indicates a data error. Notify your client services representative at MSI.IBL HAS NEGATIVELY AMORTIZED BY $000,000.00 (PRN = $000,000,000.00)
A P&I interest bearing loan has negatively amortized (interest amount due is greater than the scheduled loan payment). The amount of the negative amortization (for the current month only) is shown, as well as the new principal balance (including the negative amortization amount). This message is informational only.IBL NET OUTSTNDG OF $000,000,000.00 > TARGET PRN BAL OF $000,000,000.00
The net outstanding calculation (as defined through the Custom Calculations option of the Portfolio update [U0212]) does not meet the target principal balance established for this interest bearing loan. Target principal balances are set up during New Lease booking and may be modified through the Master Financial maintenance update [U0202]. This message is informational only.LEASE HAS ALREADY BEEN ACCRUED
The lease has already been accrued to its current point. This message is informational only, and no action is needed.LEASE HAS BEEN TERMINATED EARLY
This message is used for floating rate/level lease payments interest accrual only (LT accrual methods). It is informational and indicates that the lease has matured earlier than its scheduled term due to a large build-up in negative principal receivable. That is, the actual interest rate over the life of the lease is considerably less than the scheduled interest rate, thereby allowing the lessee to payoff earlier than scheduled. No refund of negative principal receivable is required.LEASE HAS TERMINATED EARLY AND SOME MONEY MUST BE REFUNDED
This message is used for floating rate/level lease payments interest accrual only (LT accrual methods). It is informational and indicates that the lease has matured earlier than scheduled and some negative principal receivable must be refunded to the lessee.LEASE IN GROUP CANNOT BE FOUND
The next lease in the group cannot be found. This message indicates a data error. Notify your client services representative at MSI.SOME MONEY MUST BE REFUNDED ON THIS LEASE
This message is used for floating rate/level lease payments interest accrual only (LT accrual methods). It is informational and indicates that the lease has matured and some negative principal receivable must be refunded to the lessee.STATES RECORD DOES NOT EXIST
This message is used for floating rate interest accrual. It indicates that the state for the lessee’s address does not exist on the State (RST) file. Check the lessee’s state using the Lessee update [U0203]. If the address contains the correct state, use the State update [U0713] to see if the state exists on the State (RST) file. MSI provides a full State (RST) file at the initial installation. It is maintained by the user.TRANSACTION IS IN PROGRESS
This message indicates that either the End of Period process [U04] is already submitted for the portfolio or that a data file or record needed for the accrual process is found to be locked by another user. Check to see if the accrual process completed successfully.UNABLE TO ACCESS LEASE
This message indicates that the record for the lease on the Master Financial (RLS) file is locked. Try executing the Cycle Accruals update [U0301] for the lease again. This message should not appear if executing through End of Period.UNSUCCESSFUL ACCESS OF NEXT UNLOCKED PORTFOLIO
This message appears only when executing accruals interactively across portfolios. The program tried to access the portfolio and failed because End of Period [U04] was submitted for the portfolio. During the End of Period process [U04] the updates for the portfolio are locked. The accrual process skips over the inaccessible portfolio and continues with the next portfolio.UNSUCCESSFUL BEGIN TRANSACTION FOR FINAL UPDATING
This message indicates that initialization is required before the final updating section may be completed. Final updating is done to the End of Period (RAS) file if executing through End of Period or the Operator (ROP) file if executing interactively. Contact your client services representative at MSI if this error occurs.
Totals for the Cycle Accrual Exception report [U0301D] show:
This screen is used to select the lease whose accrual is to be reversed.
This screen is used to enter the date back to which the accruals for the selected lease are to be reversed. Pertinent information about the lease is displayed.
All lease payments, use tax payments, vendor participation payments, and recurring charge payments made after the EFFECTIVE DATE must be reversed before accruals may be reversed for the lease. Use the Payment Reversal option of the Payments update [U0102] to reverse payments. The Accrual Reversal option does not reverse assessed late charges (and its associated sales tax, if the Sales Tax on Assessments module is purchased).
Assessed late charges must be waived using the Assessment Waiver option of the Assessment update [U0105].
This is the last screen of the Accrual Reversal option. When RETURN is pressed, the lease’s accruals are reversed. If the accruals could not be reversed, a message is displayed indicating the problem, and no file updating is performed. If this occurs, correct the problem before attempting to reverse accruals again.
For example, if a payment due after the effective date is partially paid, a message indicating this is shown on the screen. Reverse the partial payment through the Payment Reversal option of the Payments update [U0102]. Then re-enter this update and try to reverse accruals again.
For example, if lease payments are due monthly on the tenth of the month, the EFFECTIVE DATE must also be on the tenth of the month. If the lease payments are due quarterly (in January, April, July, and October) on the tenth of the month, the EFFECTIVE DATE must be either 1/10 or 10/01, 4/10 or 10/04, 7/10 or 10/07, or 10/10. It may not be 2/10 or 10/02, 3/10 or 10/03, etc.
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2001 by McCue Systems Incorporated.
All rights reserved.
The information contained in this document is the property of McCue Systems, Inc. Use of the information contained herein is restricted. Conditions of use are subject to change without notice. McCue Systems, Inc. assumes no liability for any inaccuracy that may appear in this document; the contents of this document do not constitute a promise or warranty. The software described in this document is furnished under license and may be used or copied only in accordance with the terms of said license. Unauthorized use, alteration, or reproduction of this document without the written consent of McCue Systems, Inc. is prohibited.