How to register a sublease structure

All subleases in Complete Control need a headlease they can be linked to. The following description will therefore first describe how to register headleases, then subleases and finally describe sublease effects on reports.

Headleases are registered just like usual lease contracts in the system. The only difference is that you will now find a new selection under Options: This contract has a sublease structure. By selecting this checkbox, other choices will disappear, and the system asks you to select if the current contract is a sublease or a headlease. Select Headlease. Then, perform initial assessment as usual.

You register subleases as usual, but choose Receivable on the payment schedule.

Note!
The stop date of the sublease cannot be after the headlease stop date. IFRS 16 lease classification is either Fixed payment or Variable payment linked to rate or index.

  1. Go to Contracts and create a new contract or open an existing one.

  2. Enter your contract as usual. But note to check the dates: The duration of the sublease should be the same as for the headlease; at least, the Start dates must be identical.

  3. Enter IFRS 16-related information:

    1. Select This contract contains a lease according to IFRS 16 as usual.

    2. Then, tick This contract is part of a sublease structure and select Sublease from the dropdown list. The system will now ask you to select the related headlease.

      Tip!
      When registering a contract in a sublease structure, you will also see that the system changes the type of contract to Financial leasing automatically. The reason for this is that operational subleases are handled via the Profit and Loss Statement and that they are therefore not relevant for IFRS 16. So, if selecting Operational Lease, the IFRS 16-related fields will disappear.

    3. Enter the Discount rate from the contract.

    4. Click Initial assessment, and the system will display this dialog.

    5. Net investment in the lease is a value for all future rental incomes and cannot be edited. Derecognition of right of use for asset in headlease is a field you must fill in. The value you enter here will be deducted from the headlease's right of use, and in case of deviations between these two fields, this will be reported as a gain or loss on the asset.
      Tip!
      In most case, you will enter the same amount as under Net investment in the lease. If you want to enter a different amount, you should discuss it with your IFRS 16 advisor.

  4. Save.

You have now performed an initial assessment of the subleased element, and you can save the contract. Go to the headlease and check that everything is correct. See View subleases on headlease.

When opening the headlease and scrolling down to the IFRS 16 section, you can see all related subleases. If you have access to these contracts, you can click the link to view details. Contracts you don't have access to will not have this link.

Under View detailed calculations you can select to only display net amounts. If you select this checkbox, you will get the headlease where the sublease elements are "removed".

Before you can reassess a sublease because of a renewal, ensure that the headlease has already been renewed. Apart from that, reassessments are treated in the usual way. But note that you must enter the effect on the asset in the headlease also on reassessments.

IFRS 16 Report

The IFRS 16 report has no changes related to lease liabilities. What you posed under Derecognition of right of use for asset from headlease, will be subtracted from the Right of use under Additions. Depreciations will display net depreciations if the sublease element is pulled out, but when clicking "+" you can go to a deeper contract level and check the depreciation effects per contract. At the bottom of the report, you will also find a section for Lease receivables.

IFRS 16 Journal Report

The journal report is the same as before, but you can now in addition view sublease postings. If you use the accounting list function in Complete Control, you must add some additional accounts for posting subleases.