Home > Financials > Compliance with IFRS 15 & 16 Regulations > IMOS - Capitalization and Amortization Configuration and Calculation Details
Overview
To meet the expense recognition requirements under certain interpretations of IFRS 15, voyage costs incurred before the performing period of a voyage, and after the nomination date, are capitalized and then amortized over the performing period as part of the month-end close process.
This page covers:
-
Required configuration and settings need to utilize the Capitalization and Amortization (Cap/Am) logic.
-
Recommended P&L Calculation options.
-
Details on how the calculations are performed when enabled.
Key Terms:
-
Nomination Date - the date when a vessel is nominated to a cargo; used, along with voyage commencement, to determine the capitalization period.
-
Performing Period - the timeframe from the Arrival at First Load Port to Departure from Last Discharge.
Required Configuration
Set both CFGNominationDateOnFixtureAndVoyage and CFGShowPNLCalcOptions configuration flags to Y. CFGVoyaccAccrualType cannot be set to Ops, because Accrual by Account is required.
Business Rules
For the Cap/Am logic to apply to any cost category, the new CM check box in the business rules for the matching Source:Code pair. In addition, new MACR business rules are required, with the following new prefixes:
-
CAP — maps costs that are capitalized based on the logic
-
Example: MACR: CAP123456, where 123456 is the account code
-
-
AM — map costs that are amortized based on the logic
-
Example: MACR: AM234567, where 234567 is the account code
-
-
EXP — map costs that are expensed to the period based on the logic
-
Example: MACR: EXP345678, where 345678 is the account code
-
-
CM — map all remaining journals generated by the accruals program when the Cap/Am flag is enabled, even though the logic does not apply to these items
-
Example: MACR: CM456789, where 456789 is the account code
-
Port Expenses Example:
-
-
PEXP: PCOSTS has the CM check box selected, indicating that the cost category is applicable for the capitalization logic
-
MACR: CAP123456 is the matching capitalization rule
-
MACR: AM123456 is the matching amortization rule
-
MACR: EXP123456 is the matching expense rule
-
MACR: CM123456 is the rule for all other cost categories that match the 123456 account code and do not have the CM check box selected
-
Minimum Recommended P&L Calculation Settings
|
Option |
Impact on Logic |
|---|---|
|
Capitalize/Amortize Costs Prior to Performing Period |
Applies the capitalization logic to expenses incurred between Nomination and Load on the voyage, then amortizes those expenses over the performing period of the voyage. |
|
Apply TC Hire to Period |
Expenses TC Hire costs incurred before nomination, as well as TC Hire costs incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Apply Additional Hire to Period |
Expenses additional TC Hire costs incurred before nomination, as well as additional TC Hire costs incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Apply Off Hire/Waiting to Period |
Allocates Off Hire to the actual period, fully deducting it in the period when it occurred. |
|
Apply Ballast Bonus to Period |
Allocates any ballast bonus to the period of voyage commencement, so it does not impact the capitalization logic when nomination happens after commencement. |
|
Apply TC Bunker Adjustment to Period |
Expenses TC Bunker Adjustments incurred before nomination, as well as TC Bunker Adjustments incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Apply TC Expenses to Period |
Expenses any TC expenses incurred before nomination, as well as TC expenses incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Apply Bunker Consumption to Period |
Expenses costs associated with Bunker Consumption incurred before nomination, as well as Bunker Consumption costs incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Apply Other Revenues/Expenses to Period |
Expenses Other Expenses incurred before nomination, as well as Other Expenses incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
|
Adjust Portion for Off Hire |
Considers Off Hire when determining the percentage for the performing period in the amortization calculation. |
|
Adjust Portion for Ballast Days |
Applies Load-to-Discharge Revenue Recognition, which is required for IFRS 15 compliance. |
|
Apply Port Expenses to Period |
Expenses Port Expenses incurred before nomination, as well as Port Expenses incurred during the performing period, to the period. Only the period from Nomination to Load remains capitalized. |
The following proration behavior applies when both conditions are true:
-
Capitalize/Amortize Costs Prior to Performing Period is enabled.
-
The corresponding Apply X to Period option (such as Apply Bunker Consumption to Period or Apply Port Expenses to Period) is not enabled for a given cost category.
When both conditions are true, expenses of that type incurred during the performing period (First Load to Last Discharge) are prorated over performing-period days only, not over total voyage days. To retain full-voyage-day proration for performing-period expenses, enable the relevant Apply X to Period option for each cost category.
Calculation Description and Example
When the Capitalize/Amortize Costs Prior to Performing Period P&L Calc option is enabled, costs incurred between the nomination date and the start of the first load port are capitalized, then amortized over the performing period, defined as the start of the first load to the end of the last discharge on the voyage. Amortization occurs as a percentage of the performing period completed on the accrual date.
Example 1: Nomination Before Commencement Date (Most Common)
This example uses bunker expenses but applies to all cost categories set up with the CM check box selected in the business rules.
The nomination date on the voyage is before the commencement date, indicating that the vessel was assigned to the cargo before the start of the voyage, and that all ballast-leg costs are capitalized and amortized over the cargo-operations performing period.
Example 2: Nomination After Commencement Date
This example uses bunker expenses but applies to all cost categories set up with the CM check box selected in the business rules.
The nomination date on the voyage is after the commencement date, indicating that the vessel was assigned the cargo after the start of the voyage, and therefore incurred ballast-leg costs that should not be capitalized and amortized over the cargo-operations performing period.
