You can record payments made from lessor to lessee, such as fit out contributions, using the Incentive component payment feature found on the Rent & Payment page. This article will break down how such payments are processed and reflected in the IFRS 16 reports.
How does Nomos One account for Incentives?
When accounting for Incentives, the Nomos One system generates a two staged approach. Check out how this functions below.
Stage One: Recognise the effective date of the Incentive
The first step is to recognise the Incentive being effective within the payment series. The output for this in the Journal report is:
Please note: If the Effective Date of the transaction is before the Commencement of the Agreement, this is incorporated in the Commencement balance calculation, so you won't see a Remeasurement entry. The same applies if the Agreement commences before transition, and the Effective Date is before the transition date - the impact is incorporated into the Transition Take Up balance calculation.
Stage Two: Recognise the payment of the Incentive
The second step is to recognise the payment of the Incentive and remove it from the payment series, as once it has been paid, it will no longer be incorporated into the Lease Liability calculation. As the first step has taken place, the output for this in the Journal report is:
Together, these two journal entries have a net impact of DR Cash and CR Right Of Use Asset to recognise the receiving of cash by the lessee and the reduction in the right of use asset value of the lease.
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