Payment Reschedule [U0104]
LeasePak menu: Daily Work [U01], Payment Reschedule[U0104]
Corresponding End of Period process: None
Related to
: Mid-term adjustments
Related to
Allows mid-term changes to financial information (payment schedule, security deposit, etc.) of precomputed leases, operating leases, and interest bearing loans (IBLs).
In this Document
Related Documents
Overview
For precomputed leases and interest bearing
loans of P&I (principal and interest) type, the yield to maturity is automatically
recalculated based on the changes made in this update.
Payment Reschedule
cannot be applied to a non-accrual lease.
There are four methods of
mid-term changes:
- Mass changes based on the user’s selection criteria (CPI). Mass changes are for precomputed leases only
- Individually, lease-by-lease (RSC)
- Deferred payment reschedule (DEF)
- RE-Write payment reschedules (RWT)
When making individual adjustments, the following financial information may be changed:
- Security deposit
- Book initial direct cost (IDC)
- Remaining term (indirectly via payment schedules)
- Estimated remaining term (for month-to-month leases)
- Remaining payment schedule (number, frequency and amount of payments)
When adjusting multiple leases, only the remaining payment schedule may be adjusted.
Using the float index assigned to the lease and the current floating rates (as
stored through the Base Rates update [U0705]), an additional charge is computed
and added to each payment remaining. This option may be used if the lease agreement
has a built-in payment adjustment (e.g., based upon the Consumer Price Index).
If a payment reschedule is to adjust payments already accrued, use the
Accrual Reversal option of the Cycle Accruals update [U0301] to reverse accruals,
before making the adjustment through the Payment Reschedule update [U0104]. In
this case, only the RSC adjustment method may be used.
If a payment
reschedule involves a lease on which a principal paydown was made, the paydown
amount must be considered in determining new payment amounts.
If the
lease accrual method is of a precomputed type, and the Payment Reschedule update
is used to reduce (write down) the Residual of the lease, a special calculation
will be used to recognize a portion of the write down as a loss while maintaining
the yield (APR) over the remaining term of the lease.
The method used
for residual write down affects the same G/L accounts for all the finance lease
precomputed accrual methods. The G/L transaction will be:
| General Ledger Account | Amount |
| DR Loss on Sale | Present Value of the Residual Write Down |
| CR Unguaranteed Residual | |
| DR Unearned Income | Balance of Residual Write Down |
| CR Unguaranteed Residual |
The PV (present value) of the residual write down is also the change in accrued principal.
The balance of the residual write down will be the remaining difference between
the amount of the residual to the write down less the present value of the residual.
For example, if a lease has a 12% yield for 12 months and a $20,000
residual being written down to $15,000, with 9 months remaining on the lease,
the PV of the residual is (using an HP12c with the PV calculation):
5,000 FV <== Future
Value
12 g i <== Enter Interest Rate (Yield) @ 1.0% per month (12% per
annum)
9 n <== (Remaining) Term
PV <== Present Value
4571.70
<== Result
5,000 - 4,571.70= 428.30
The journal entry for this write down would be:
| General Ledger Account | Amount |
| DR Loss on Sale | $4571.70 |
| CR Unguaranteed Residual | |
| DR Unearned Income | $428.30 |
| CR Unguaranteed Residual |
The accrued principal
will also be reduced by the PV, or $4571.70. The yield will remain the same. For
non-monthly leases, the write-down can only be processed on an accrual month.
There will be a difference in the yield after the residual write-down,
but in most cases it will be less than a basis point (one hundredth of a percent
.0001). However, if the lease accrual method is not AAPR or RAPR, then a residual
write down will result in a change to the yield that exceeds the expected “.0001%”
(+ or -). Other precomputed methods such as Rule of 78 and Straight line do not
earn income using level yield (APR) method. Therefore, the yield shown for these
other precomputed accrual methods is informational only and is not used to calculate
the monthly income amounts.
When the Cash Control module is purchased
and a Payment Reschedule is made to the lease, LeasePak will automatically assign
a trace reference information when a security deposit is received from the Payment
Origination code. The trace reference will appear in the Cash Control Payment
History [R0926] report.
When a Suspense item has been tied to the lease
that is being rescheduled, LeasePak will automatically default the trace reference
information to the Suspense Review [R0203] report.
Adjustment Methods will not adjust the recurring charges schedules. They will need to be manually adjusted using the RCR Schedule [U0236] update.
Payment Reschedule Selection
This
screen is used to specify lease(s) to be rescheduled.
A specific lease
number must be entered for adjustments to an individual lease.
A float
rate adjustment may be made to all leases, a selection of leases (such as all
leases for portfolio 1), or an individual lease. Before using the float rate adjustment,
a float index must be assigned to each lease through the Book Lease option of
the New Lease update [U0101] or through the Master Financial update [U0202], and
float indices must be established through the Base Rates update [U0705].
If the Notes Payable module is purchased and if an active note is attached
to the lease, a warning message will be displayed.
Field Descriptions
- ALL
Enter X to select all leases for a float rate adjustment. Leave blank to enter a selection of leases or a specific lease number.
- PORT
Enter the number of the portfolio for a float rate adjustment. Leave blank if adjusting all leases or entering a specific lease number.
- COMP
Enter the number of the company for a float rate adjustment. Leave blank if adjusting across companies or entering a specific lease number.
- REGN
Enter the number of the region for a float rate adjustment. Leave blank if adjusting across regions or entering a specific lease number.
- OFFIC
Enter the number of the office for a float rate adjustment. Leave blank if adjusting across offices or entering a specific lease number.
- LEASE
Enter the lease number. Leave blank if adjusting multiple leases for float rate.
Adjustment Method, Processing Month
This screen is used to select the adjustment method and, if required, the processing month. PROCESSING MONTH is necessary only for the CPI ADJUSTMENT METHOD.
Field Descriptions
- ADJUSTMENT
METHOD
These are the valid methods:
- RSC Allows changes to security deposit, book initial direct cost, insurance
premium, residual (precomputed leases only), and the remaining portion
of the payment schedule. PROCESSING MONTH is not accessible.
Additionally, this adjustment method calculates the Turn-In Date for the lease +1 day after the Maturity Date.
- CPI Used
when the payment amounts for the remainder of the payment schedule are
adjusted by adding an amount that depends on a float rate index, such
as the consumer price index. Use this method to make an annual lease anniversary
adjustment to a lease or group of leases.
- DEF Deferrals
are used when the lease will go through the extension/deferment criteria
eligibility. LeasePak will prompt the user to enter both a non-zero number
of months to defer and a valid month to start the deferment from. If the
last accrued to date is later than the processing month an accrual reversal
from the last accrued to date month will be made. It will automatically
insert a SKIP for every month deferred and by default move the deferred
monthly payment into a balloon payment on the final payment due date.
- RSC Allows changes to security deposit, book initial direct cost, insurance
premium, residual (precomputed leases only), and the remaining portion
of the payment schedule. PROCESSING MONTH is not accessible.
- RWT Rewrite
allows changes to security deposit, book initial direct cost, insurance
premium, residual (precomputed leases only), and the remaining portion of
the payment schedule, the date of the last rewrite and the number of rewrites
will be stored.
- PROCESSING MONTH (MM/YY)
This field is accessible only if the CPI ADJUSTMENT METHOD is entered. This date has two effects:
- Only leases within the selection criteria whose LEASE DATE month is the same as the month entered here are adjusted
- The percentage used in calculating the float rate adjustment is the average rate for the PROCESSING MONTH.
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