How to split 1 piece of equipment into 2 pieces of equipment
PROBLEM: The lease contract was originally built with 1 equipment record that has a quantity of 1, however there are truly multiple equipment records on the contract. The one piece of equipment is acting like an "umbrella" to carry the cost of every piece of equipment. The user is wanting to sell one of the multiple pieces of equipment, however they are unable to do so because there is only 1 piece of equipment listed for the total amount of all of the pieces of equipment added together.
HOW TO RESOLVE: You must perform a modification on the contract within the equipment screen and split the equipment. However, the USER is responsible for figuring out the correct percentage: how much is the piece of equipment worth that you are wanting to split in comparison to the entire amount of equipment.
1. Open the Contract (example contract ID: "561-001")
2. Access the Equipment Screen
3. Perform a Contract Modification, set the effective date and select a Reason Code that is applicable.
a. There will now be a green "split" icon available to click on.
b. They system will require you to provide a Percentage amount that you are wanting to split away into its own new separate asset record. The split will not only split the current basis but it will ALSO split the current residual as well. For my example, I am wanting to split 1 truck away from the record of 50 trucks. In my example, all of my trucks cost the same and have the exact same amount of residual.
i. Each of the 50 trucks costs $40,000
ii. Each truck has a 7% residual, which is $2,800
iii. $40,000 / $2,000,000 = 0.02
iv. 0.02 x 100 = 2 (this is the percent that I will input for the split
c. You will also need to indicate what this new piece of equipment's Location and Billing Location are at this time. The system will display the Location Code value. If you're account does not have a Location Code set on the locations, you may want to go back and assign Location values to each location so you know which ones to pick. This can easily be done within the Account Locations screen, especially if you need to modify several locations to add a Location Code.
d. Then hit OK.
e. ASPIRE will then ask if you want to continue with the split, say Yes.
f. The system will calculate and then will display that the Asset Split was successful, click OK.
g. You will now see 2 pieces of equipment, with the exact same description, code values, etc. The first equipment record will contain ALL but the one piece you split away. The second will contain ONLY the record you split.
4. You must now clean up the equipment records so they accurately reflect the correct descriptions. This will also require contract modifications. Click the feather to complete the modification. Upon posting this first modification, you will be presented with GL Entries (which will include earnings through the date of the modification)
5. Modify the description of the other equipment record as well. This time you will get a zero dollar entry when posting the modification. After posting, you'll see the descriptions on both equipment records listed correctly.
6. NOW you must review each piece of equipment's Depreciation Screen to ensure that the Depreciation information is correct on each. If you you need to make a change, you will need to perform a contract modification while on the Depreciation Screen.
a. This will only be applicable if the contract is a Tax Lease (due to Tax Depreciation) or an Operating Lease (due to Tax and Book Depreciation)
7. IF the residual amount is NOT the same on each, you will need to perform another set of modifications - one to each equipment record, which will move the residual from one piece to the other.
a. You may need to refresh your screen to see Contract Modification again. Select Contract Modification, the same Effective Date, and a Reason Code.
b. Modify the residual for one piece of equipment. My example will be reducing the split equipment record first - removing $1800 from the residual, to make it a value of $1000.
c. Post the modification, you will receive GL entries.
d. Now I have to add that residual back on to the other asset record, because the difference belongs to the other assets. Perform another modification just like the last one, but move the difference to the other asset.
e. Post the modification and you'll receive GL entries again, essentially reversing the ones that you received in the step above. Click OK.
7. Now you can perform the needed Asset Disposal to remove the split piece(s) of equipment from the contract.
KEEP IN MIND:
The proper way to build contracts in ASPIRE is to have one record for each piece of equipment. You should ONLY list multiple pieces of equipment as 1 record when all assets are exactly the same (Cost, description, residual, equipment location, billing location, depreciation, etc). When you do this, you will use the QUANTITY field and indicate how many pieces of equipment are included in this record, and list the dollar amount for 1 piece of equipment. ASPIRE will do the math and calculate values in the "Extended" section. The Unit values display the amounts PER unit, and the Extended amounts display the Unit amount x Quantity. The contract will have an amount financed of the Extended Current Basis.
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