Cancellation of rent expense
The Lease accounting solution provides two settings and calculation logics that allow to obtain postings and journal entries to cancel rent expense that are straight-lined over the lease term or over the payment period.
During consolidation, rent payment recognized as rent expense in compliancy with local GAAPs must be excluded or canceled and replaced by IFRS 16 compliant accounting where the rent payment is an amortization of the lease liability.
In consolidation systems where the accounting solutions who recognize the local GAAP rent expense doesn’t provide its cancellation in IFRS GAAP, Planon Lease Accounting Solution can provide those cancellation.
 | Even existing under the technical name of ‘Accounting standard’, such calculation logics don’t induce supporting any local GAAP that would require a straight-lining of rent expense. |
Provided as ‘Accounting standard’, they can thus be entered on a Contract line as a Secondary or Tertiary Accounting standard, but only in association with corresponding Contract type ‘O, Operating’.
Two straight-lining methods are provided, through two dedicated ‘Accounting standard’:
• straight-lining over the term of the lease
• straight-lining over the payment period