Interest Calculation (LM180)

Run Interest Calculation (LM180) to calculate the interest and principal components of capital lease payments. This program produces a report listing the calculated interest and principal data for each lease payment, along with the company, accounting units, and accounts to which they were posted. The report also prints lease and company totals and an error report, if it was unable to process a lease.

You can run interest calculations only on lease payments that have been released and interfaced to the Accounts Payable system using AP Interface (LM140).

Process at a Glance

Create lease invoices using Invoice Creation (LM131).
(Optional - this step) Adjust invoices using Invoice Adjustment (LM31.1).
Approve the invoices using Invoice Payment Approval (LM36.1) or Mass Payment Approval (LM136).
Interface the invoices to the Accounts Payable system using AP Interface (LM140).
(Conditional - this step) Calculate interest for capital lease payments, using Interest Calculation (LM180).
Post leases, using Lease Posting (LM190).
(Conditional) Terminate leases due for closing, using Lease Termination (LM45.1).
Close period, using Period Closing (LM199).

Processing Effect

After lease invoice payments have been successfully interfaced to the Accounts Payable system using LM140, the Accounts Payable system assumes responsibility for transferring payment amounts to the General Ledger system and processing payments (starting with running Invoice Distribution Closing (AP175) and continuing with processing the invoice payments).

The Lease Management application assumes responsibility for calculating the interest for capital leases, transferring the interest amounts to the interest account, and adjusting the debt account by the interest amount.

If an interest allocation code is attached to the lease, when calculating the principle/interest, the interest portion of the payment is multiplied by the percentage for each company/accounting unit defined for the allocation code.

After you have run LM140, there is no interdependency between the Accounts Payable processes and the Lease Management processes. Each application can continue processing in parallel with the other, and without waiting on the other. See the Accounts Payable User Guide for information on processing invoice payments.

More Information

Interest calculations are computed by multiplying the lease balance as of the most recent payment by the interest rate. If executory costs are included in the lease payment, they are subtracted from the balance before the calculation is taken.

To view the calculation results without updating the interest records, run LM180 with the Update field set to N (No).

Interest is calculated by default in the transaction (lease) currency. To calculate interest in company base currency, select B (Base) in the Currency field.