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There are two types of lease accounting- capital lease and operating lease. Unlike
capital lease, operating lease is shown on the balance sheet of the lessor(one who
owns the asset that is leased to someone else) in all operating leases. In the case of
capital lease , whether the leased asset will be on the balance sheet of the lessor or
lessee(one who makes use of the asset but it is not the owner) is determined by
several factors that will differ whether the lease is with or without purchasing
options for the lessee.

In SAP the component is FI-LA (also unknown as FI-AA-LM), lease accounting can
process leases and will enable automatic asset related postings in FI-AA and
contract-related accrual postings in FI-G/L, as well as the required one- time lease
postings. The lease accounting engine (FI-LAE)you can use FI-LA to process the
leases in the SAP CRM system using the quotations and contracts functionality and
price them using IPC (Internet Pricing and Configuration) and FIMA(Financial
Mathematics in Leasing).

The FI-LA works by finalizing a lease contract, CRM billing generates the Billing
Requirement Items (BRI) and using the CRM application Transaction Tax Engine
(CRM TTE) that can be integrated with third-party tax solutions like Vertex and you
can then calculate the lease taxes on the leases. You can use contract A/R and A/P
to handle lease receivables and cash, then you can use reporting tools to obtain the
information about the leases.

I will cover the following in this document.

 Lease accounting engine (FI-LAE)
 Basic settings
 Value determination
 Production setup
 Reports Lease Accounting Engine (FI-LAE)

Lease Accounting Engine (FI-LAE)

The Lease Accounting Engine (FI-LAE) is integrated with SAP CRM to control and
manage the entire transactions postings in FI-LA, at the center of lease accounting
the LAE picks up the contract values automatically from the CRM contract when a
new lease is created or if there has been a contract change in the CRM system, and
then classifies the lease as a operating lease or a capital lease with or without
Bargain Purchase Option (BPO).

The necessary postings are then made in FI-AA for the asset creation and
capitalization on the basis of customization settings, when you have defined and
assigned the accounting principle to the company code for parallel accounting, the

we will start with assigning the account principle to the company code using transaction 0FILA006_1. when changes are made the LAE updates the FI-AA with the details on lease terminations. remember we have already defined the accounting principle to be used for parallel accounting in section Financial Global Settings and Company Code Parameters. lease extensions.LAE can support valuation lease assets for both book depreciation and taxation purposes. . etc. it also posts one-time accounting entries such as inventory relief. With the valuation rules defined. select FILA as the leasing component on the initial screen. Basic Settings We need to define and assign a few basic settings to configure lease accounting. the LAE performs accrual postings automatically in FI-G/L. to facilitate parallel valuation of lease assets we need to associate each participating company code to at least one accounting principle.