If you need to record a Rent Holiday, Rent Free period or other Discount against your Agreement after it's commenced, you can do this through a Variation Event. In this guide we'll walk you through the steps of how to record this.
Video Tutorial: How to Add a Rent Holiday or Discount to your Agreement after Commencement
Check out this video guide on how to add a Rent Holiday or Discount to your Agreement, or keep reading below:
How to Add a Rent Holiday / Discount to your Agreement
To add a Rent Holiday / Discount to your Agreement:
- On the relevant Agreement, click Action > Create / Edit Events
- This will take you to the Events page of the Agreement Wizard where you can scroll to the Variation section and click Edit
- Using the calendar tool or text field, enter a Variation Event for the date you agreed to to the terms of the Rent Holiday / Discount. Remember to click Add
Please don't edit any Agreement data or information while inside the Agreement Wizard. Any changes made here will be altering your information and data known at the Commencement of your Agreement and will thus result in a change to your Opening Balance if you're reporting under IFRS 16 for this Agreement.
- Click Done at the top or bottom of the page to return to the Agreement Timeline
- You'll now see a new icon on the Agreement Timeline representing the Variation Event. At Step 1, clik Start Event
While you can add Events on a date that is within a locked period, you cannot complete these Events on the Agreement Event Timeline. If your Variation Event is within a locked period, you'll need to ask a user with the Administrator permission in your Organisation to edit the Lock Date before you can complete the Event. Check out this article for more information.
- At Step 2, select 'Yes, there are variations to the agreement' then click + Add variation
- Navigate to the Rent & Payment page of the Agreement Wizard
- Scroll down to the Holiday/Discounts section and click Add a new holiday/discount
- Enter the details of the Rent Holiday / Discount, including:
- A Description of the Holiday / Discount
- The Effective Date of the Holiday /Discount
- The Type of Holiday / Discount (Permanent or Date Range)
- The Amount Type (Percentage or Dollar)
- The Amount
- If the Type is selected as Date Range, select the Start and End Date of the Payment
Make sure your click Add to save your Holiday / Discount against your Agreement
Is your Payment Effective Date within a locked period? You'll need to ask a user with the Administrator permission in your Organisation to edit the Lock Date before you can add the payment. Check out this article for more information.
Please note that you'll need to enter the Amount of the Holiday / Discount to be in line with your selected Rent Payment Period (e.g. if you've selected Monthly, you'll need to enter the Monthly Discount amount).
The IFRS 16 Engine will apply a different logic depending on whether you select the Amount Type as dollar or percentage.
When selecting the dollar type, the system logic will deduct that Amount on any Rent Payment Dates that fall between the Start and End Dates of the Holiday/Discount.
When selecting the percentage type, the system logic will deduct the Amount for the period between the Start and End Dates (inclusive). For any proportionate periods, this will pro-rata.
- Click Done at the top or bottom of the page to return to the Agreement Timeline
- On the Timeline, click Next at step 2 of the Variation Event
Please note that adding an IFRS 16 Component Payment such as a Holiday/Discount won't produce a Display Note summarising the change made in the Variation Event. You may like to add your own Custom Event Note to record details of the Rent Holiday/Discount that was added through the Variation Event.
- Upload any supporting Documentation, or select No Documentation and click Next
- Confirm the Data Change Date of the Event (this should be the same as the Event Date). If these don't match, click Edit to open the calendar tool to adjust the Data Change Date before clicking Complete
You'll then get a Certification to say the Event has been completed, and the Variation Event icon on the Timeline will turn green!
Validating your Rent Holiday / Discount was Added Correctly
If you use Nomos One for IFRS 16 Reporting, you can validate your Rent Holiday or Discount was added correctly using the Journal Report. If you run the Journal report over the Effective Date of the Holiday / Discount you'll see a Remeasurement for this. If you run the Report across the Start and End Dates of the Discount you'll see reduced Rent Payment lines for the period.
Nomos One does not provide or purport to provide any accounting, financial, tax, legal or any professional advice, nor does Nomos One purport to offer a financial product or service. Nomos One is not responsible or liable for any claim, loss, damage, costs or expenses resulting from your use of or reliance on these resource materials. It is your responsibility to obtain accounting, financial, legal and taxation advice to ensure your use of the Nomos One system meets your individual requirements.