Oracle Lease Accounting – Part 2: Configuration and Expense Lease Execution

 

In Part 1 of this blog series, we laid the foundation by exploring the fundamentals of Oracle Lease Accounting and understanding how the solution supports compliance with modern leasing standards such as ASC 842 and IFRS 16. With the conceptual groundwork in place, it’s time to move from theory to hands-on execution.

In Part 2, the focus shifts to configuration and execution, where we’ll walk through how to set up Oracle Lease Accounting for an expense lease and demonstrate the end-to-end process within the application. This includes key configuration steps, important functional considerations, and a practical demo that shows how an expense lease flows from setup through accounting and reporting.

Whether you are a functional consultant, implementation lead, or finance professional looking to deepen your understanding of Oracle Lease Accounting, this part of the series is designed to help you confidently translate requirements into a working solution. By the end of this walkthrough, you should have a clear view of how expense leases are configured, processed, and accounted for in Oracle Fusion.

 

Initial Configuration

 

Setup and MaintenanceàFinancials (Offering)àLease Accountingà Manage Lease Accounting Configuration

 

Click on + Sign  (System Options)

 

Ensure the select option you have is selected as Select System Options

Select Business Unit

Primary Accounting Standard- Options are ASC842, IFRS or Japanese GAAP

If you have Secondary Ledger- you can select Secondary Accounting Standard as well.

Select Interest Calculation Method: Daily Compound Interest or Periodic Compound Interest.

Daily Compound Interest: daily compound interest refers to the way interest expense on a lease liability is calculated and accrued by compounding the interest every day, rather than monthly or annually.

Period Compound Interest: Calculation as per periods -select the calculation calendar if you want to select Period Compound Interest (Monthly,Semi-Monthly)

Auto Lease Numbering: Lease Numbering (Automatic or Manual)

Lease Transaction Approval: Enable Approvals for Lease Transaction Yes or No

Default Currency Conversion Type: Select Currency Conversion

Ledger Name: Enter Primary Ledger Name

Amortization Calculation Frequency: Frequency of Amortization Calculation (Daily,Monthly, Yearly)

Asset Numbering: Automatic or Manual

 

As I am currently configuring expense leases, I will focus only on the related setup.

Select Item Master

Payables Integration: Mark it as Yes if you want to create AP Invoices for leases

Require Property Definition: If you want to select the property which you are the lessee you can select it. Recommend to select as  NO

 

Save and Close

Lets Create Discount Rate Index

 

Click +

Select Business Unit

Index Name: Name of the Discount Rate Index

Index Rates

Start Date

Discount Rate

Final (Please note, the discount rate index will not be active till its marked as Final)

 

Lets create Expense Lease Template now

 

Quick Entry Form will Open- enter required information

Business Unit

Asset Type (Equipment or Property)

Template Type (Payment or Option)

Template Name

Payment Purpose (Rent,Depreciation,etc)

Payment Type (Base Rent, Deposit)

Frequency – Monthly, Yearly

 

Enable Generate Invoices if you want Oracle Lease module to create Invoices for you

Enable Lease Liability and Right-of-use if you want Oracle to calculate it for you.

 

Provide Distributions

Save and Close

 

Expense Lease Process

 

Click on Lease

Click on + to create new Expense Lease

Enter following in the quick entry box

Business Unit

Lease Type : Expense

Legal Entity

Lease Number

Asset Type

Lease Start and End Date

Supplier (Lessor Name)

Primary Accounting Classification Method (Finance Lease,Operating Lease,Exempt)

Discount Rate Index

All Data from the template will automatically be pre-populated for you – you can also attach Project Number and Expenditure Organization if you need the lease accounting invoices to be costed in PPM

Next is you create an Asset- provide Asset Number Location, Amortization End Date, Item information to save the same.

 

Enter Payment Information and Accounting Information

 

 

Typically- all accounting information is populated from template- enter data here only if you need to override it at the Lease level

 

 

Validate and Submit the Lease

 

Click on Process Expense Lease Payments task whenever you need to generate the AP Invoices for Payments

Select Payment Processing, Export to Payables and Launch Import Payables Invoice alongwith Process type and Business Unit information to generate invoices- you can schedule the process as well.

You can review the Payment and Invoice Information by Navigating to task Manage Expense Payments

This concludes Part 2 of the Oracle Lease Accounting series, where we focused on configuring the application and walking through the end-to-end expense lease process using a practical demo. By now, you should have a clearer understanding of the key setup decisions, how those configurations impact lease processing, and how Oracle Fusion consistently handles accounting in line with compliance requirements.