Core TSIs : Contracts : Working with Contracts : Price indexation : Indexation based on a percentage
Indexation based on a percentage
The following examples illustrate how price indexation based on a percentage is used.
Example 1 - Indexation based on a percentage
For contract X, the following are defined:
Contract’s start date: 1/1/2020
2 contract lines with start date 1/1/2020
Indexation method 1:
indexation percentage = 10%
indexation period = every year
Indexation method 2:
indexation percentage = 5%
indexation period = every 6 months
For contract line 1, price indexation based on method 1 is started at 1/1/2021.
For contract line 2, price indexation based on method 2 is started at 7/1/2021.
Indexation is executed up to and including 1-1-2021. The following figure provides an overview after indexation:
Diagram of situation after indexing a contractDiagram of situation after indexing a contract
Example 2 - Indexation based on a percentage
For contract Y, the following has been defined:
Contract’s start date: 1/1/2020
2 contract lines with start date 1/1/2020
Indexation method 1:
indexation percentage = 10%
indexation period = every year
Indexation method 2:
indexation percentage = 5%
indexation period = every 6 months
For contract line 1, price indexation based on method 1 is started at 1/1/2021;
At 3/1/2021, the indexation method is changed from method 1 to method 2.
For contract line 2, price indexation based on method 2 is started at 3/1/2020.
At 8/1/2020 the price has been manually changed to 650. At 3/1/2021, the indexation method is changed from method 2 to method 1.
Indexation will be executed up to and including 1-1-2022. The following figure illustrates the scenario after indexation:
Diagram of situation after indexing a contractDiagram of situation after indexing a contract
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When a contract line based on lease accounting is activated with predefined indexation (based on percentage), the indexation is applied for the whole contract line at activation and then the initial set of accounting commitments are generated . This means that the indexation process takes place at the activation of the contract.
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For details on working with lease accounting in Planon, refer to Lease accounting.