Sales-based Adjustment 

Displaying a Sales-based Adjustment

Use

This type of lease is usually used for retail property. It usually provides for the payment of a fixed base rental fee plus a percentage of the tenant’s gross income in excess of a predetermined minimum amount of sales. Although percentage payments may be prorated or paid monthly, payments are usually based on an annual computation.

In this scenario we will display a rental agreement which has been preset for sales-based adjustment and discuss all the relevant settings. In addition we will look at this rental agreement’s sale-based history to see what type of a balance was left due to the year end’s settlement.

Procedure

  1. Call up the transaction as follows:
    2.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rental agreement ® Display

    Transaction Code

    FOV3

  2. Enter the following data:
    3.

    Field

    Data

    Company code

    3000

    Rental agrmnt

    0100.1206.001

  3. Choose or Master data.

    4. In the General data file tab you can see that the primary adjustment type for this rental agreement has been set to Sales-based rent

  4. Choose the Conditions tab page.

    5. Here you can see that there are three conditions types assigned to this rental agreement. Store basic rent is the monthly rent paid by the tenant. OC Flat rate is the flat rate amount paid for the operational costs. Sls.bsd rent AP is the sales-based rental advanced payments that the tenant agreed to. In other words, the tenant has agreed to pay a percentage of his sales income as part of his rent. Since we do not know what the tenant income is going to be for this year until the end of the year, the tenant has agreed to pay a set amount in an advance payment each month. At the end of the year a settlement will take place.

  5. In the Description cond. type column double-click on the Sls. bsd rent AP condition type.

    6. A Maintain Adjustment Types dialog box appears.

  6. Double-click on Sales-bas.rent.

    7. Here you can see the detailed information regarding the Sales-based rent calculation. At the top you can see the condition type affected by this calculation. Please note the Unit of measurement field. By selecting unit of measurement it is possible to charge the sales-based rent on a number of goods sold rather then the amount sold. For example, if the tenant sells more than 500,000 cartons of goods you will receive 4% of the income.

    Other information you see here is the Settlement variant, this informs you that you will conduct your settlement on a yearly basis. We also see what the tenant’s planned sales are, and the sales grading that we agreed upon.

  7. Choose .
  8. Select the other date and choose.

    9. Please note that the Sales gradings information varies from one year to the other.

    On the lower right side of the screen you can also see that a Sales report for 1999 exists.

  9. Choose .

    10. Here you can see the actual amount in sales reached during that year.

  10. Choose
  11. Choose Cancel to return to the rental agreement.
  12. Choose until the overview tree appears.
  13. Call up the transaction as follows:
    14.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rent accounting ® Sales-based rents ® Sales settlement ®History.

    Transaction Code

    FOUB

  14. Enter the following data:
    15.

    Field

    Data

    Company code

    3000

    Rental agrmnt

    0100.1206.001

    Sales year

    1998

  15. Choose .

    16. Here we can see the amount that was calculated by the system (Settlement), the amount that was paid by the tenant in advane payments (Advanced pmnt) and the Balance left. In this case the tenant had to make an additional payment at the end of the year 1998.

  16. Choose once.
  17. In the Overview of Sales-based Rental Agreements Already Cleared change the Sales year to 1999.
  18. Choose .

    19. Now you can see the results for 1999.

  19. Choose until the overview tree appears.

Creating a Sales-based Adjustment for Your Rental Unit

Use

This type of lease is usually used for retail property. It usually provides for the payment of a fixed base rental fee plus a percentage of the tenant’s gross income in excess of a predetermined minimum amount of sales. Although percentage payments may be prorated or paid monthly, payments are usually based on an annual computation.

In this scenario we will use a rental unit: store which we created in the Master data section. We will create a rental agreement for this rental unit, specify the sales-based adjustment type, and maintain information specific to this adjustment. In addition, we will create a sales report statement for the year 1999 and conclude with a simulation/execution of the adjustment run.

Creating the Rental Agreement and Specifying a Sales-based Adjustment

  1. Call up the transaction as follows:
    2.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rental agreement ® Create

    Transaction Code

    FOV1

  2. Enter the following data:
    3.

    Field

    Data

    Company code

    3000

    Collect.RA

    [Leave blank]

    Rental agrmnt

    [Leave blank]

    Business entity

    [Number of your own business entity]

    Rental unit

    [Number of your own vacant rental unit: store]

  3. Choose or Master data.
  4. Under General data, enter the following data:
    5.

    Field

    Data

    Contract type

    Commerc. Agrmt

    Adjustment type

    Sales-based rent

    Rental start

    01/01/1999

    Rental end

    [Leave blank]

    Term

    120

    Notice type

    [Leave blank]

  5. Choose Partner.
  6. On the Create Rental Agreement: Partner Maintenance screen choose .
  7. In the dialog box that appears, double-click on role 0600.
  8. In the Choose Tenant (debit-side): Initial Screen enter US in the Country field and choose .

    9. The system will now check any partners with this role type that are located in the United States.

  9. Double-click on any one of the partners. The system will automatically assign that partner to your rental agreement.
  10. Choose Rental agreement.
  11. Choose the Conditions tab page.

Because this is a sales-based rental agreeement, an additional condition type Sales based rent advanced payments is required. At the beginning of the contract you agree with the tenant on a advance payment amount for the sales-based portion of the rental payment.

  1. Choose .
  2. Select Sls. bsd rent AP.
  1. Choose .

    2. A new condition type is added to your list.

  2. In the Condition amount column for the Sales based rent advance payments enter $200.
  3. Choose .
  4. In the Description cond. type column, double-click on the Sls. bsd rent AP condition type. A Create Rental Agreement: Sales-based rent dialog box appears. Here we will specify additional information regarding this sales-based rental agreement.
  5. Enter the following data:
    6.

    Field

    Data

    Settlement variant

    A001 [Yearly, 01/01 to 12/31]

    Planned sales (Amt)

    1,000,000 [Amount of sales planned]

  6. In the Sales gradings box, enter the following data:

Sales from

Sales up to

% rate

[Leave blank]

500,000

3

500,001

[Leave blank]

5

In the section above we have specified that we would like the settlement to take place on a yearly bases (A001), and that the tenant’s planned sales are $1,000,000. If the sales fall below the amount of $500,000 we will receive 3% of the amount of the sales. If, however, the sales exceed this amount we will receive 5%.
  1. Choose .
  2. An informational dialog box appears.
  3. Choose.
  4. Choose .

The system will take you back to the Create Rental Agreement: Intial screen .

Activating the Rental Agreement

Use

To conduct the adjustment run, it is recommended to first activate the rental agreement.

Procedure

  1. From the Create Rental Agreement: Initial screen menu select: Rental agreement ® Change.
  2. Enter the following data:
    3.

    Field

    Data

    Company code

    3000

    Rental agreement

    [Number of your rental agreement]

  3. Choose or Master data.
  4. Choose Activate and Save.

    5. In the Activation date dialog box your rental start date of 01/01/1999 has been defaulted.

  5. Choose .
  6. Choose until the overview tree appears.

Creating the Annual Sales Report / Statement of Revenue

Use

At the end of the year, you need to record the sales income of your tenant and process a settlement (i.e. reconcile the advance payments made with the actual rent to be paid).

For purposes of this scenario, let’s assume that our tenant declares $4,500,000 of gross income for 2000.

Procedure

  1. Call up the translation as follows:
    2.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rent accounting ® Sales-based rents ® Sales reports ® Maintain

    Transaction Code

    FOU2

  2. Enter the following data:
    3.

    Field

    Data

    Company code

    3000

    Rental agreement

    [Your rental agreement number]

    Cond.type

    40 (Sales-based rent)

    Report from

    01/01/1999

    Report upto

    12/31/1999

    Sales year

    1999

  3. Choose .
  4. On the next screen, enter the annual sales figures: $4,500,000.
  1. Choose .
  2. Choose until the overview tree appears.

Simulating and Executing a Sales Settlement

Use

Once the tenant’s sales data is in the system, the next step is the sales settlement which compares the tenant’s advance payments made throughout the year with the actual rent to be paid (based on sales income) and accounts for any differences (further payments/credits).

You assume that the tenant's sales report for 1999 is received on January 4, 2000 and the sales settlement is processed on the same day. You first simulate the settlement.

Procedure

  1. Call up the transaction as follows:
    2.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rent accounting ® Sales-based rents ® Sales settlement ® Simulate

    Transaction Code

    FOUE

  2. Enter the following data:

Field

Data

Company code

3000

Rental agreement

[Your rental agreement number]

Start of settlement period

01/01/1999

End of settlement period

12/31/1999

  1. Choose .

The system displays a list with the following information: the total sales based rent (before and after tax) the total advance payments made throughout the year (in our case this amount is 0), and the balance.

  1. Choose until the overview tree appears.
  2. Call up the transaction as follows:
    3.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rent accounting ® Sales-based rents ® Sales settlement ® Execute

    Transaction Code

    FOUA

  3. Enter the following data:

Field

Data

Company code

3000

Rental agreement

[Your rental agreement number]

Start of settlement period

01/01/1999

End of settlement period

12/31/1999

Document date

01/04/2000

Posting date

01/04/2000

Document type

DA

Execute adjustment

Deselect (when this field is selected the system automatically adjusts the sales-based rent advance payment amount in the rental agreement as of the date specified in the Adjustment valid from field)

Adjustment valid from

[Leave blank]

  1. Choose .
  2. Select the rental agreement by checking-off the box to the left of the description.
  3. Choose Post.
  4. Choose until the overview tree appears.

Displaying Customer Open Items

  1. Call up the transaction as follows:
    2.

    Menu Path

    Accounting ® Real estate management ® Rental ® Rental agreement ® Display

    Transaction Code

    FOV3

  2. Enter the following data:
    3.

    Field

    Data

    Company code

    3000

    Rental agreement

    [Number of your rental agreement]

  3. Choose Display open items.

    4. During the normal yearly flow, debit posting and incoming payments would be conducted on a monthly basis for all the conditions listed in this rental agreement. For the purpose of this example we have only concentrated on the Sales based advance payments condition and assumed that the tenant has done no advanced payments throughout the year. Therefore, at the end of the year when the sales settlement takes place, the systems compares and calculates the difference of the advanced payments made by the tenant and the sales calculation. In our case the system has calculated that the tenant has to make a payment. An open item for the amount is automatically created.

  4. Choose until the overview tree appears.