IFRS Leasing:

SAP Real Estate Solution Approach

SAP SE
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Agenda
1. The new IFRS and US GAAP Leasing Standard
2. The Roadmap - Get ready for the new Standards
3. Solution Overview
4. Look inside
5. Summary
The Leasing Event of a Generation – Driving Significant Change

US-GAAP
PAST FUTURE
IFRS
Accounting

OPERATING Real Estate

LEASE
Purchasing
FINANCE
LEASE

New standard on leasing released Need to capitalize many corporate Besides affected accounting,
by FASB and IASB operating leases and record these new standards will transform
lease obligations on the balance corporate business processes
sheet as assets and liabilities in many areas
Every IFRS/ US-GAAP reporting
company renting real estate or
leasing equipment will be impacted

Large companies with big property

portfolio are affected most and need
to react quickly to prepare

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SOME OF AMERICA’S BEST-KNOWN COMPANIES –
NAMES SUCH AS AT&T INC, CVS HEALTH CORP.
AND DELTA AIRLINES INC. – LIKELY WILL SOON HAVE
TO EFFECTIVELY BOOST THE DEBT THEY REPORT
ON THEIR BALANCE SHEETS BY TENS OF BILLIONS
OF DOLLARS. THE TOTAL POSSIBLE IMPACT FOR ALL
COMPANIES: AS MUCH AS $2 TRILLION.
– Wall Street Journal – Nov 11, 2015
Agenda
1. The new IFRS and US GAAP Leasing Standard
2. The Roadmap - Get ready for the new Standards
3. Solution Overview
4. Look inside
5. Summary
The Roadmap
Get ready for the new Standards

PLAN TRANSITION AND BUILD RUN

Valuation and
Classification

Contract
Management
Multi-GAAP
Posting
Implement
Initial
ANALYSIS Perform
Valuate
PHASE Abstracting
Contracts
Change Management Start Contract Management

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Agenda
1. The new IFRS and US GAAP Leasing Standard
2. The Roadmap - Get ready for the new Standards
3. Solution Overview
4. Look inside
5. Summary
IFRS Real Property Leasing
SAP Real Estate Solution

SAP FINANCE
SAP Real Estate Management is a
subcomponent of SAP Finance – IFRS & US GAAP Leasing

simplifying your solution landscape by: Lease Portfolio

Contract-
Management GENERAL LEDGER
In RE-FX (MULTI-GAAP ACCOUNTING)

 Real-time valuation of finance leases Lease

Administration
Reporting
Payment
Generation
ACCOUNT
PAYABLE/RECEIVEABLE
 Elimination of financial interfaces
CONTROLLING & PROFIT CENTER
 Reducing the number of applications in ACCOUNTING

system landscape Lease Review

Asset
Accounting
REPORTING
Asset Asset
Reporting
Classification Valuation

Coordination between the Lease Administrator and Asset Account is critical for proper classification and
valuation. Sharing a common platform eliminates operational silos between these critical players.

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SAP Real Estate Solution Approach
Integrated Leasing Scenario for Real Property Management

Multi-GAAP Posting

 Multi-GAAP enabling (IFRS, US GAAP, HGB)

 Manage right-of-use assets and liabilities
 Customer / Vender accounting
Contract Management  Post depreciation and repayments
 Lease payments
 Different lease types
 Controlling / Profit center accounting
 Leasing partners
 Subject of agreement:
cost center, property equipment,…
Valuation and Classification
 Terms and conditions for notice
and renewal options (validity)  Classification and evaluation rules
 Lease payment cash flow  Calculate and report on net present
with full integration value, depreciation, repayment and
 Critical dates and reminders interest rate
 Document management  Change management / Re-valuation
 Support transition scenarios
 Create / Link to fixed assets

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IFRS Real Property Leasing
Contract Design

Contract Structures Right Creation or assignment Asset creation/

Subjects of Use Assets of RoU asset assignment

Contract Combining legal and

terms accounting terms
Valuation Rule

Erzeugung
Kondition Conditions are the base Current and historic
Erzeugung
Bewertung
Conditions Erzeugung
Bewertung
for valuation calculation valuations
Bewertung
Create valuation

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IFRS Real Property Leasing: SAP Real Estate Solution Approach
Example: Leased Building for 3 Years

(1) Asset Value BALANCE SHEET P&L

(2) Interest Assets Liabilities

(3) Depreciation Interest Paid

RoU Asset Lease Liabilities (2) 1.918 €

(4) Payment
(1) 31.972 € (1) 31.972 €

(H) Transfer posting (3) 10.657 € (2) 1.918 €

Depreciation
(1) 31.972 € (4) 11.000 €
(3) 10.657 €
(A) Lease inst. payment/rent (3) 10.082 € (1) 31.972 €
(2) 1.918 €

IFRS 16 (4) 11.000 €

HGB

US GAAP
Lease Clearing
(A) 11.000 € Lease Expense
All Ledger
(H) 11.000 € (H) 11.000 €
(4) 11.000 € Lease Creditor (2) 1.918 €
(4) 11.000 € (A) 11.000 € (3) 10.082 €

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Agenda
1. The new IFRS and US GAAP Leasing Standard
2. The Roadmap - Get ready for the new Standards
3. Solution Overview
4. Look inside
5. Summary
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Fiori Launch Pad Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Contract Main Data Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Multi GAAP Valuation Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Generated Fixed Asset Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Valuation Cash Flows Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create Cash Post Report

Multi GAAP Posting Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Lease Building Example CONTRACT MANAGEMENT VALUATION AND CLASSIFICATION Multi-GAAP Posting

Enter Leasing Create Perform Create Create cash Post Report

Reporting Launchpad Contract Valuation Fixed Asset Flows Valuation Results
Agenda
1. The new IFRS and US GAAP Leasing Standard
2. The Roadmap - Get ready for the new Standards
3. Solution Overview
4. Look inside
5. Summary
IFRS Real Property Leasing: SAP Real Estate Solution Approach
Summary

SAP Contract Functionalities Overview:

 Robust contract management with contract types, terms, different contract subjects, reminders
and document management
 Direct FI integrated cash flow with tax management and multi-currency functionality
 Automated rent adjustments, integrated postings, cost controlling and reporting

Valuation Functionalities Overview:

 Flexible valuation rules per accounting principle and contract subject
 Full integration with Right of Use Asset, including depreciation calculations
 Calculation and posting of valuation cash flows based multi-GAAP assignments
 Support of different transition scenarios (retrospective, non-retrospective,
comparison periods and net worth value specified)
 Mass data update reports
 Detailed valuation reporting
 Details see OSS Note 2255555

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© 2016 SAP SE or an SAP affiliate company. All rights reserved.

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In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop
or release any functionality mentioned therein. This document, or any related presentation, and SAP SE’s or its affiliated companies’ strategy and possible future
developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time
for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-
looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

© 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 23