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Last Updated: 2023-06-23
Example: Set Up Operating Leases for IFRS and GASB Accounting

Example: Set Up Operating Leases for IFRS and GASB Accounting

This example illustrates how to configure Workday to create operating lease-type supplier contracts for:
  • International Financial Reporting Standards (IFRS)
  • U.S. Government Accounting Standards Board (GASB)
Kim needs to configure Workday to enable her accountant, Jim, to create operating lease-type supplier contracts. The contracts Jim wants to create need to align with the latest IFRS 16 standards on lease accounting, effective January 1, 2019.
Jim needs to record contracts that represent the lease liabilities and right-of-use (ROU) assets of an office building that their company, MBAA Services, has a multiyear lease for. Current IFRS standards consider the building a depreciable capital asset. He also needs to record contracts under the former accounting standards, which don't recognize operating leases as depreciable capital assets, to provide financial statements for existing bank covenants. To meet these requirements, Kim needs to set up lease accounting and multibook asset accounting (MBAA).
  • Configure asset accounting.
  • Configure asset tracking.
  • Configure depreciation profiles.
  • Configure these business processes:
    • Asset Assign Accounting Event
    • Asset Registration Event
  • Configure these security domains in the Business Asset Accounting functional area:
    • Set Up: Business Asset Accounting
    • Set Up: Company Asset Books
  • Configure these security domains in the Common Financial Management functional area:
    • Set Up: Spend Categories
  • Configure these security domains in the Supplier Contracts functional area:
    • Process: Supplier Contract
    • Set Up: Supplier Contract Accounting
    • Set Up: Supplier Contracts
  1. Access the
    Edit Tenant Setup - Financials
     task.
  2. In the
    Lease Accounting
     section, select these options:
    • Operating Lease IFRS or Public Sector
    • Modified or Full Retrospective Reporting
  3. In the
    Business Assets Options
     section, select the
    Enable Multibook Asset Accounting
     check box.
  4. Click
    OK
    .
  5. Access the
    Maintain Spend Categories
     task.
  6. Select
    Maintain Spend Categories without Hierarchy
    .
  7. Click
    OK
    .
  8. Add a new spend category.
    In the
    Spend Category Detail
     section, enter Leased Buildings on the
    Spend Category Name
     field and select these
    Spend Category Usage
     options:
    • Procurement
    • Supplier Invoice
  9. Select these check boxes on the
    Asset Tracking
     section:
    • Track Items
    • Lease
  10. Click
    OK
    .
  11. Access the
    Maintain Supplier Contract Types
     task.
  12. Add rows for supplier contracts and input these values:
    Contract Name
    Options
    Financial Lease Fixed Payment
    Select these check boxes:
    • Scheduled Invoices
    • Receive Contract Lines
    • Financial Lease
    Financial Lease Variable Payment
    Select these check boxes:
    • Scheduled Invoices
    • Receive Contract Lines
    • Financial Lease
    • Variable Payment
    Operating Lease Fixed Payment
    Select these check boxes:
    • Scheduled Invoices
    • Receive Contract Lines
    • Operating Lease
    Operating Lease Variable Payment
    Select these check boxes:
    • Scheduled Invoices
    • Receive Contract Lines
    • Operating Lease
    • Variable Payment
    Straight Line Expense Fixed Payment
    Select these check boxes:
    • Scheduled Invoices
    • Operating Lease
    Straight Line Expense Variable Payment
    Select these check boxes:
    • Scheduled Invoices
    • Operating Lease
    • Variable Payment
  13. Click
    OK
    .
  14. Access the
    Maintain Book Codes
     task.
  15. Add rows and enter these book code names:
    • Financial Leases and Fixed Assets
    • Operating Lease IFRS 16
    • Operating Lease IFRS 16 Assets
    • Straight Line Expense
  16. Click
    OK
    .
  17. Access the
    Maintain Books
     task.
  18. Add books and input these values:
    Name
    Includes Book Codes
    Includes Blank Book Code
    Operating Lease IAS 17
    Select:
    • Financial Leases and Fixed Assets
    • Straight Line Expense
    Select.
    Operating Lease IFRS 16
    Select:
    • Financial Leases and Fixed Assets
    • Operating Lease IFRS 16
    • Operating Lease IFRS 16 Assets
    Select.
  19. Click
    OK
    .
  20. Access the
    Maintain Lease Contract Book Code Configuration
     task.
  21. Add a row and select
    M500.1 Assets MBAA Services
     from the
    Company or Company Hierarchy
     prompt.
  22. Add these book code configurations:
    Lease Type
    Accounting Method
    Book Code
    • Operating Lease Fixed Payment
    • Operating Lease Variable Payment
    ROU Asset Depreciation Expense
    Operating Lease IFRS 16
    • Straight Line Expense Fixed Payment
    • Straight Line Expense Variable Payment
    Straight Line Expense
    Straight Line Expense
  23. Click
    OK
    .
  24. Access the
    Maintain Asset Books
     task.
  25. Add these new asset books and select the
    Accounting Book
     check box on each row:
    • Financial Leases and Fixed Assets
    • Operating Lease IFRS 16
  26. Click
    OK
    .
  27. Access the
    Maintain Asset Book Rules
     task.
  28. Select
    Operating Lease IFRS 16 Assets
     from the
    Asset Book
     prompt.
  29. Click
    OK
    .
  30. Configure an asset book rule using these values:
    Field
    Value
    Spend Category
    Leased Buildings
    Resulting Accounting Treatment
    Depreciable Capital Asset
    Resulting Depreciation Profile
    Term - Current Period - Upon Acquisition
  31. Click
    OK
    .
  32. Access the
    Add Company Asset Book
     task.
  33. Select
    M500.1 Assets MBAA Services
     from the
    Company
     prompt.
  34. Click
    OK
    .
  35. Select these books from the
    Asset Book
     prompt:
    Asset Book
    Book Code
    Financial Leases and Fixed Assets
    Financial Leases and Fixed Assets
    Operating Lease IFRS 16
    Operating Lease IFRS 16 Assets
  36. Click
    OK
    .
  37. Access the
    Maintain Company Asset Book Restrictions
     task.
  38. From the
    Company
     prompt, select
    M500.1 Assets MBAA Services
    .
  39. Click
    OK
    .
  40. Configure these asset book restrictions:
    Spend Category
    Supplier Contract Type
    Lease Accounting Method
    Restrict to Company Asset Books
    Primary Company Asset Book Override
    Leased Buildings
    • Operating Lease Fixed Payment
    • Operating Lease Variable Payment
    ROU Asset Depreciation Expense
    Operating Lease IFRS 16
    Operating Lease IFRS 16
    Leave blank.
    Leave blank.
    Leave blank.
    Financial Leases and Fixed Assets
    Financial Leases and Fixed Assets
  41. Click
    OK
    .
  42. Access the
    Edit Account Set
     task.
  43. Select
    Corporate
     from the
    Account Set
     prompt.
  44. Click
    OK
    .
  45. Add ledger account rows and populate these fields on the
    Add Row for Edit Account Set
     page:
    Identifier
    Account Name
    Ledger Account Type
    8100
    Interest Expense - Lease
    Expense
    6501
    Lease Expense
    Expense
    1520
    Multibook Settlement Account
    Asset
    2114
    Operating Lease Liability
    Liability
    1539
    Operating Lease ROU Asset Leased Buildings
    Asset
    1551
    ROU Leased Asset Contra
    Asset
  46. Click
    Done
    .
  47. Access the
    View Account Posting Rule Set
     report.
  48. Select
    Standard Account Posting Rule
     from the
    Account Posting Rule Set
     prompt.
  49. Click
    OK
    .
  50. Click
    Edit Posting Rule
     and configure these account posting rules:
    Account Posting Rule
    Resulting Ledger Account
    Dimension
    Values
    Business Asset Multibook Settlement
    1520:Multibook Settlement Account
    Lease Type
    Operating
    Lease Asset
    1539:Operating Lease ROU Asset Leased Buildings
    Lease Type
    Operating
    Spend Category
    Leased Buildings
    Lease Asset Contra
    1551:ROU Leased Asset Contra
    Leave blank.
    Leave blank.
    Lease Expense
    8100:Interest Expense - Lease
    Interest
    Interest
    Lease Type
    Operating
    6501:Lease Expense
    Lease Type
    Operating
    Lease Liability
    2114:Operating Lease Liability
    Lease Type
    Operating
  51. Click
    OK
    .
  52. Access the
    Maintain Journal Source Mapping to Operational Transactions
     task.
  53. Configure these journal entry sources:
    Journal Entry Source
    Operational Transaction
    Asset Adjustment Journal Entry Source
    Asset Adjustment
    Asset Assign Accounting Journal Entry Source
    Asset Accounting Assignment
    Asset Disposal Journal Entry Source
    Asset Disposal
    Asset Removal Journal Entry Source
    Asset Removal
    Depreciation Adjustment Journal Entry Source
    Depreciation Adjustment
    Depreciation Journal Entry Source
    Depreciation
    Expense Recognition Journal Entry Source
    Expense Recognition
    Initial Recognition of Lease Journal Entry Source
    Initial Recognition of Lease
  54. Click
    OK
    .
  55. Access the
    Receipt (Default Definition)
     business process.
  56. Access
    Business Process
    Edit Definition
     from the related action menu.
  57. Select these business process step values:
    Order
    Type
    Specify
    b
    Action
    Review Trackable Receipt Lines
    c
    Service
    Initiate Asset Registration Events from Receipt for Supplier Contracts
  58. Click
    OK
    .
Jim can create lease-supplier contracts and record lease accounting transactions for M500.1 Assets MBAA Services that align with former and current IFRS accounting standards.