Suspended Earnings [U0115]
'B' Method IBLs: refer to the
Interest Accrual After Maturity section of the Interest Bearing Loans overview document for more information on how LeasePak handles suspended earnings on loans with accrued interest after maturity.
The Suspended Earnings update is used for two purposes:
1) To suspend earnings (invoicing continues and receivables accrue in separate G/L accounts for suspended earnings). Status code begins with N.
2) To place a lease in non-accrual (accruals cease and invoicing shows only the amounts outstanding before lease went into non-accrual). Status code begins with H.
The first alternative allows earnings for a non-performing lease to be suspended while billing with accurate General Ledger reporting continues. From the lessee's point of view, there is no apparent change. Invoicing and accruals (establishing receivables) continue with no interruption. Internally, however, parallel General Ledger accounts are used to record lease payment receivables and income for suspended accounts.
When income earnings are suspended, all outstanding lease payment receivables due after the effective date of the earnings suspension, unamortized IDC and unbilled interest (as of the effective date) are transferred to IDC/ IDR suspensed General Ledger accounts. Note that receivables due on or before the effective date of the earnings suspension are unaffected.
The accrual process sets up receivables in the suspense receivables G/L accounts (separated into principal and income portions) and income in the Suspended Income Accrued G/L account. Invoicing continues as normal. If a payment is received, the payment is allocated against principal and interest in the usual manner. The amount of income paid is accumulated in a suspended income collected Master Financial (DLS) field.
If earnings are reinstated for the account, Suspended Income Accrued is transferred to the normal income G/L account. If a lease is paid off or terminated with a suspended status, the payoff or termination transaction is called a charge off. If the account is charged off, the suspended income collected is reapplied against the remaining principal balance or contract receivable before the loss/amount to charge against bad debt reserve is calculated.
In effect, the books represent the account as the lessee would view it. Adjusting General Ledger accounts are used to reflect the account as the lessor would view it.
Leases with credit memos can be suspended with status 'N***' if the switch ALLOW PREPAYMENT TO 'N***' SUSPENDED EARNINGS LEASE in the Miscellaneous Customizations option of the Portfolio [U0212] update is set to 'Y'.
Leases that has been extended using the 'RES' residual Extension with an 'RES' accrual method and whether or not in an 'N***' suspended earning status can be suspended and earnings can be reinstated if the switch ALLOW '*RES' ACCRUAL EXTENSION ON 'N***' SUSPENDED EARNINGS LEASE in the Miscellaneous Customizations option of the Portfolio [U0212] update is set to 'Y'.
When earnings are reinstated on a suspended earnings lease extended using the cash-basis 'RES' Residual extension with an '*RES' accrual method (by returning the lease to an 'AEXT' Active Extended), the program will perform the following general ledger transaction for any amounts accrued after the extension but not yet paid:
| Debit | Credit | Amount |
| 3 - Lease Payments Receivable | 41 – Cash - Suspended Receivable (Principal) | Residual Amount |
| 40 - Suspended Receivable (Income) | Remaining Payment Amount |
NOTE: When user changes the lease or an interest-bearing loan from a suspended earnings status back to a normal status, LeasePak creates the following general ledger transaction using the transaction name of REINSTATE EARNINGS.
Following are the GL account when moving amount from a suspended dealer reserve GL account to an amortized dealer reserve GL account for pre-computed lease. The amount is the value of the lease suspended IDC7 before the transaction began.
| General Ledger Account | Amount |
| DR IDC7 – AMORT D/L DEALER RESERVE | Amount – REINSTATE EARNINGS |
| CR IDC7 – D/L SUSP DEALER RESERVE |
Following are the GL account when moving amount from a suspended dealer reserve GL account to an amortized dealer reserve GL account for an operating lease. The amount is the value of the lease suspended IDC7 before the transaction began.
| General Ledger Account | Amount |
| DR IDC7 – AMORT O/L DEALER RESERVE | Amount – REINSTATE EARNINGS |
| CR IDC7 – O/L SUSP DEALER RESERVE |
Following are the GL account when moving amount from a suspended dealer reserve GL account to an amortized dealer reserve GL account for an interest bearing loan. The amount is the value of the lease suspended IDC7 before the transaction began.
| General Ledger Account | Amount |
| DR IDC7 – AMORT DEALER RESERVE | Amount – REINSTATE EARNINGS |
| CR IDC7 – SUSP DEALER RESERVE |
Under the second alternative, the Suspended Earnings update [U0115] suspends the accrual process by changing the lease's activity status to a non- accrual status. All accrual functions cease (i.e., income is not recognized for the lease, and receivables are not transferred to suspended General Ledger accounts). Invoicing still continues for the lease. However, only receivables outstanding before the lease is placed on non-accrual are invoiced.
When the lease is taken off non-accrual status, the next accrual for the lease automatically performs all the "catch-up" accruals necessary to bring the lease current.
The Automatic Suspended Earnings [U0439] process works in conjunction with the Suspended Earning [U0115] update. This end of period module will automatically suspend income for leases that have been delinquent based on the number of days entered in the AUTO SUSPEND DAYS field in the Miscellaneous Customizations option of the Portfolio [U0212] update. Additionally, LeasePak will unsuspend leases based on the number of days entered in the AUTO UNSUSPEND DAYS field of the Miscellaneous Customizations option. Only leases with active status or normal matured status can be automatically suspended.
Note: Leases in a portfolio that uses Lease Discounting cannot be suspended. Refer to Lease Discounting [U0123] update for more information on Lease Discounting.
Also: Leases extended using the RES method on a cash basis may not be suspended. Refer to Lease Extension [U0108] update for more information on this method.
Note: U0115 records the suspended subvention income for each set of subvention unearned general ledger account. LeasePak allows the leases with set of subvention amount to suspend. LeasePak will identify the suspended income on the set of subventions during accrual process.
NOTE: U0115 records transactions for leases and interest bearing loan lease when suspended with dealer bonus amounts. If the suspended earnings date is in past, LeasePak will reverse the accruals and re-accrue each lease or interest bearing loan lease and will place the suspended dealer bonus amounts into a new general ledger account, Suspended Dealer Bonus.
LeasePak records the following general lender transactions for Accruals (Suspended). The general ledger entries are also produced through U0301, Cycle Accrual:
LeasePak produces the following GL transactions to re-accrue dealer bonus for a pre-computed lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC6 – D/L SUSP DEALER BONUS | Amount – ACCRUAL NORMAL CYCLE. |
| CR IDC6 – UNAMORT D/L DEALER BONUS |
LeasePak produces the following GL transactions to re-accrue dealer bonus for an operating lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC6 – O/L SUSP DEALER BONUS | Amount – ACCRUAL NORMAL CYCLE. |
| CR IDC6 – UNAMORT O/L DEALER BONUS |
LeasePak produces the following GL transactions to re-accrue dealer bonus for an interest bearing loan lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC6 – SUSP DEALER BONUS | Amount – ACCRUAL NORMAL CYCLE. |
| CR IDC6 – UNAMORT DEALER BONUS |
Note: U0115 records transactions for leases and interest bearing loan lease when suspended with dealer reserve amounts. If users entered the suspended earnings effective date is in past, LeasePak will reverse the accruals and re-accrue each lease or interest bearing loan lease and will place the suspended dealer reserve amounts into a new general ledger account, Suspended Dealer Reserves.
LeasePak records the following general lender transactions for Accruals (Suspended). The general ledger entries are also produced through U0301, Cycle Accrual:
LeasePak produces the following GL transactions to re-accrue dealer reserves for a pre-computed lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC7 – D/L SUSP DEALER RESERVE | Amount – ACCRUAL NORMAL CYCLE |
| CR IDC7 – UNAMORT D/L DEALER RESERVE |
LeasePak produces the following GL transactions to re-accrue dealer reserve for an operating lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC7 – O/L SUSP DEALER RESERVE | Amount – ACCRUAL NORMAL CYCLE |
| CR IDC7 – UNAMORT O/L DEALER RESERVE |
LeasePak produces the following GL transactions to re-accrue dealer reserve for an interest bearing loan lease if the effective date of suspended earnings is in past:
| General Ledger Account | Amount |
| DR IDC7 – SUSP DEALER RESERVE | Amount – ACCRUAL NORMAL CYCLE |
| CR IDC7 – UNAMORT DEALER RESERVE |
The additional IDC fields (IDC8, IDC9, and IDCA–IDCH) are supported by this update and maintains the following general ledger transaction when the lease becomes suspended same as for IDC3 and IDC5.
| Debit | Credit | ||
| 242 | LEASE INCOME ADJUSTMENT | 243 | SUSPENDED LEASE INCOME ADJUSTMENT |
The additional IDC fields (IDC8, IDC9, and IDCA–IDCH) are supported by this update and maintains the follwoing general ledger transactions when the lease becomes unsuspended.
For a precomputed and operating type lease:
| Debit | Credit | ||
| 624 | IDC8 AMORTIZATION | 634 | IDC8 – SUSPENDED AMORTIZATION |
| 625 | IDC9 AMORTIZATION | 635 | IDC9 – SUSPENDED AMORTIZATION |
| 626 | IDCA AMORTIZATION | 636 | IDCA – SUSPENDED AMORTIZATION |
| 627 | IDCB AMORTIZATION | 637 | IDCB – SUSPENDED AMORTIZATION |
| 628 | IDCC AMORTIZATION | 638 | IDCC – SUSPENDED AMORTIZATION |
| 629 | IDCD AMORTIZATION | 639 | IDCD – SUSPENDED AMORTIZATION |
| 630 | IDCE AMORTIZATION | 640 | IDCE – SUSPENDED AMORTIZATION |
| 631 | IDCF AMORTIZATION | 641 | IDCF – SUSPENDED AMORTIZATION |
| 632 | IDCG AMORTIZATION | 642 | IDCG – SUSPENDED AMORTIZATION |
| 633 | IDCH AMORTIZATION | 643 | IDCH – SUSPENDED AMORTIZATION |
For an interest–bearing loan type lease:
| Debit | Credit | ||
| 604 | IDC8 – FASB91 INCOME ADJUSTMENT | 614 | IDC8 – SUSP FASB91 INCOME ADJUSTMENT |
| 605 | IDC9 – FASB91 INCOME ADJUSTMENT | 615 | IDC9 – SUSP FASB91 INCOME ADJUSTMENT |
| 606 | IDCA – FASB91 INCOME ADJUSTMENT | 616 | IDCA – SUSP FASB91 INCOME ADJUSTMENT |
| 607 | IDCB – FASB91 INCOME ADJUSTMENT | 617 | IDCB – SUSP FASB91 INCOME ADJUSTMENT |
| 608 | IDCC – FASB91 INCOME ADJUSTMENT | 618 | IDCC – SUSP FASB91 INCOME ADJUSTMENT |
| 609 | IDCD – FASB91 INCOME ADJUSTMENT | 619 | IDCD – SUSP FASB91 INCOME ADJUSTMENT |
| 610 | IDCE – FASB91 INCOME ADJUSTMENT | 620 | IDCE – SUSP FASB91 INCOME ADJUSTMENT |
| 611 | IDCF – FASB91 INCOME ADJUSTMENT | 621 | IDCF – SUSP FASB91 INCOME ADJUSTMENT |
| 612 | IDCG – FASB91 INCOME ADJUSTMENT | 622 | IDCG – SUSP FASB91 INCOME ADJUSTMENT |
| 613 | IDCH – FASB91 INCOME ADJUSTMENT | 623 | IDCH – SUSP FASB91 INCOME ADJUSTMENT |
IDC ASC 842
U0115 Suspended Earnings will produce the following general ledger transaction (REINSTATE EARNINGS) when a lease becomes unsuspended and activity status is set to ANOR – Active Normal:
| Debit | Credit | ||
| 666 | UNAMORTIZED IDC COST – ASC 842 | 667 | SUSPENDED IDC ACCRUED – ASC 842 |
Following are the general ledger transaction produced by this update when the lease is Prorate Income, IDC/IDR, Depr field from U0212 Portfolio ? Miscellaneous Customizations is set to and lease is suspended to (reinstate earnings) when a lease becomes unsuspended with activity status set to ANOR – Active Normal:
| Debit | Credit | ||
| 670 | DEFERRED IDC AMORTIZATION – ASC 842 | 671 | DEFERRED SUSP IDC ACCRUED – ASC 842 |
This screen is used to specify the lease to place in suspended earnings or non-accrual status.
Field Descriptions
- LEASE
Enter the lease number. Only active leases may be entered; any lease which has been paid off, charged off, or discounted may not be accessed. In addition, leases in a portfolio that uses Lease Discounting may not be processed.
This screen is displayed if the lease entered is currently in an active status (i.e., not in a suspended earnings or non-accrual status). The next screen sample is displayed if the lease is currently in a suspended earnings or non- accrual status.
This screen is used to place an active lease in a suspended earnings status or non-accrual status. The current status of the lease is displayed. The user specifies the new status for the lease, with an effective date. The default effective date is the current accrued to date of the lease.
Field Descriptions
- LEASE
ACTIVITY STATUS
The current lease activity status is displayed and may be changed to any of the following non-accrual or suspended statuses:
- HINS Non-accrual non-compliant insurance coverage. The lessee has not yet obtained insurance or the proper insurance coverage.
- HREC Non-accrual rescission. The lessee refuses to pay due to defective equipment.
- HREP Non-accrual involuntary repossession. The lessor has assigned the leased equipment for repossession.
- HSET Non-accrual insurance settlement. The leased equipment is destroyed and the lease will be closed using money from the insurance settlement.
- HSKP Non-accrual lessee skip. The lessee absconded with the leased equipment.
- HVOL Non-accrual voluntary repossession. The lessee is unable to make payments and voluntarily returns the leased equipment to the lessor.
- HHLD Non-accrual hold - miscellaneous reasons. The lessor desires to suspend earnings for a lease for reasons which do not fit any of the above categories.
- NINS Suspend non-compliant insurance coverage. The lessee has not yet obtained insurance or the proper insurance coverage.
- NREC Suspend rescission. The lessee refuses to pay due to defective equipment.
- NREP Suspend involuntary repossession. The lessor has assigned the leased equipment for repossession. If the lease activity status is changed to NREP, payments for this lease may not be processed.
- NSET Suspend insurance settlement. The leased equipment is destroyed and the lease will be closed using money from the insurance settlement.
- NSKP Suspend lessee skip. The lessee absconded with the leased equipment.
- NVOL Suspend voluntary repossession. The lessee is unable to make payments and voluntarily returns the leased equipment to the lessor. If the lease activity status is changed to NVOL, payments for this lease may not be processed.
- NH07 Suspended Bankruptcy Document 7,11 or 12. This lease has been marked for Credit Bureau Reporting.
- NH13 Suspended Bankruptcy Document 13. This lease has been marked for Credit Bureau Reporting.
- NP13 Paid Suspended Bankruptcy Document 13. This lease has been marked for Credit Bureau Reporting.
- NP07 Paid Suspended Bankruptcy Document 7, 11, or 12. This lease has been marked for Credit Bureau Reporting.
- NHLD Suspend hold - miscellaneous reasons. The lessor desires to suspend the accrual process for a lease for reasons which do not fit any of the above categories.
- NH01 Suspended Earnings-foreclosure The lessor desires to suspend the accrual process for a lease based on foreclosure reasons.
- NP01 Charge Off-foreclosure. The lessor desires to charge off the lease under foreclosure.
- NH02 Suspended Earnings-insurance claim. The lessor desires to suspend the accrual process for a lease based on insurance claim reasons.
- NP02 Paid Off-insurance claim. The lessor desires to pay off the lease based on insurance claim reasons.
- NH03 Suspended Earnings-settlement. The lessor desires to suspend the accrual process for the lease based on settlement.
- NP03 Paid Off-settlement. The lessor desires to pay off the lease based on settlement reasons.
- NH04 Suspended Earnings-write off. The lessor desires to suspend the lease based on reasons for write off.
- NP04 Charge
Off-write off. The lessor desires to charge off the lease based on reasons for
a write off.
Note: If HELP is used, all possible lease activity statuses appear. However, lease statuses not specifically listed above are invalid entries for this update.
- ACTIVITY SUBSTATUS (Optional)
Select and "Activity Substatus" code. Use help arrow
to select an activity substatus from available substatus code list. This field further defines the status of a lease or to activate rules set up for a particular U0709 Activity Status/Substatus combination. Users must first set up code for this Activity Substatus field to have them available, particularly to be able to use Activity Substatus for setting processing tasks/rules in U0709 Activity Status/Substatus. Use code category "ACTSUBSTAT" from U0722 Custom Code to Add, Delete, and Modify Activity Substatus codes and descriptions. Do not delete by default added "ACTSUBSTAT" code category value. Users can only modify the descriptions of by default available code category.
Credit Bureau Extract users: When user clicks OK, LeasePak checks if the Activity Status/Substatus combination requires setting Payment History Profile to D. If it is required to set Payment History Profile to D and the "Effective Date" is prior to the current month, than LeasePak updates the Payment History Profile accordingly.
- EFFECTIVE
DATE
The current accrued to date of the lease is displayed as the default EFFECTIVE DATE of the earnings suspension and may be changed. The EFFECTIVE DATE must be in MM/DD/YY or DD/MM/YY format, depending on the Date Format Preference field in Security [U0706].
The EFFECTIVE DATE must be a valid payment or accrual date (i.e., the day portion must be the payment due day), must be before or equal to the current accrued to date, and must be after or equal to the commencement date.
For Interest Bearing Loan types, the effective date of the suspension or non- accrual may not be before the last payment effective date processed for the loan.
Accruals are reversed to this EFFECTIVE DATE, the lease is placed in a suspended earnings status, and the income is accrued again under the new lease status. All income accrued after the EFFECTIVE DATE is considered suspended income. All income prior to and including the EFFECTIVE DATE is considered normal income.
For a lease placed in a non-accrual status there is no accrual activity at all after the EFFECTIVE DATE.
NOTE: If the effective date is in past, LeasePak will reverse the accruals and re-accrues subvention amount leases to reflect the subvention income into the general ledger account, suspended subvention income account. Every set of subvention will have a separate suspended income general ledger account. LeasePak will record the general ledger transactions to re-accrue subvention income for both IBL & NON-IBL leases if the effective date is in past.
This screen is displayed if the lease entered is currently in a suspended earnings status or non-accrual status. The previous screen sample is displayed if the lease is currently in an active status.
This screen is used to change the status of a suspended lease to another suspended earnings status or to an active status (i.e., take the lease off earnings suspension). This screen also can be used to change a status of a non- accrual lease to another non-accrual status or to an active status. A suspended lease can not be placed directly in non-accrual status nor can a non- accrual lease be changed to suspended status.
Field Descriptions
- LEASE ACTIVITY STATUS
The current lease activity status is displayed and may be changed to any one of the following statuses:
- AACQ Active acquired. The lease has been acquired by another lessor.
- AA01 Active Prior Charge Off. A previously terminated lease that has been reactivated.
- AA02 Active Prior Skip. The lessee had previously absconded and placed in 'HSKP' or 'NSKP' status. The lease is active and will be tracked as a previous skip.
- ANOR Active normal (the normal status for a lease).
- ABPT ACTIVE BLOCK PAYMENTS The lease is active and will continue to accrue to the general ledger accounts. Payments of any type may not be posted including: Payments [U0102], Batch Payments [U0415], and Assumed Payments [U0414], will not be allowed. In addition, Payoffs or Terminations
- [U0108], will not be allowed. The lease will not mature to (NMAT) status. This status is entered through the Master Financial update [U0202].
- ARED Active redemption. A previously repossessed asset has been redeemed.
- AREN Active renegotiated. The lease has been renegotiated.
- AREP Active assigned for repossession. The lease has been assigned for repossession but has not yet been recovered. If the lease activity status is changed to AREP, payments for this lease may not be processed.
- HINS Non-accrual non-compliant insurance coverage. The lessee has not yet obtained insurance or the proper insurance coverage.
- HREC Non-accrual rescission. The lessee refuses to pay due to defective equipment.
- HREP Non-accrual involuntary repossession. The lessor has assigned the leased equipment for repossession.
- HSET Non-accrual insurance settlement. The leased equipment is destroyed and the lease will be closed using money from the insurance settlement.
- HSKP Non-accrual lessee skip. The lessee absconded with the leased equipment.
- HVOL Non-accrual voluntary repossession. The lessee is unable to make payments and voluntarily returns the leased equipment to the lessor.
- HHLD Non-accrual hold - miscellaneous reasons. The lessor desires to suspend earnings for a lease for reasons which do not fit any of the above categories.
- NINS Suspend non-compliant insurance coverage. The lessee has not yet obtained insurance or the proper insurance coverage.
- NREC Suspend rescission. The lessee refuses to pay due to defective equipment.
- NREP Suspend involuntary repossession. The lessor has assigned the leased equipment for repossession. If the lease activity status is changed to NREP, payments for this lease may not be processed.
- NSET Suspend insurance settlement. The leased equipment is destroyed and the lease will be closed using money from the insurance settlement.
- NSKP Suspend lessee skip. The lessee absconded with the leased equipment.
- NVOL Suspend voluntary repossession. The lessee is unable to make payments and voluntarily returns the leased equipment to the lessor. If the lease activity status is changed to NVOL, payments for this lease may not be processed.
- NH07 Suspended Bankruptcy Document 7,11 or 12. This lease has been marked for Credit Bureau Reporting.
- NH13 Suspended Bankruptcy Document 13. This lease has been marked for Credit Bureau Reporting.
- NP13 Paid Suspended Bankruptcy Document 13. This lease has been marked for Credit Bureau Reporting.
- NP07 Paid Suspended Bankruptcy Document 7, 11, or 12. This lease has been marked for Credit Bureau Reporting.
- NHLD Suspend hold - miscellaneous reasons. The lessor desires to suspend the accrual process for a lease for reasons which do not fit any of the above categories.
- NH01 Suspended Earnings-foreclosure The lessor desires to suspend the accrual process for a lease based on foreclosure reasons.
- NP01 Charge Off-foreclosure. The lessor desires to charge off the lease under foreclosure.
- NH02 Suspended Earnings-insurance claim. The lessor desires to suspend the accrual process for a lease based on insurance claim reasons.
- NP02 Paid Off-insurance claim. The lessor desires to pay off the lease based on insurance claim reasons.
- NH03 Suspended Earnings-settlement. The lessor desires to suspend the accrual process for the lease based on settlement.
- NP03 Paid Off-settlement. The lessor desires to pay off the lease based on settlement reasons.
- NH04 Suspended Earnings-write off. The lessor desires to suspend the lease based on reasons for write off.
- NP04 Charge
Off-write off. The lessor desires to charge off the lease based on reasons for
a write off.
Note: If HELP is used, all possible lease activity statuses appear. However, lease statuses not specifically listed above are invalid entries for this update.
LeasePak Documentation Suite
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