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Statement of Direction for Changes to IFRS 16 and ASC 842 for Property Manager

Recently
the IASB (International Accounting Standards Board) and FASB (Financial
Accounting Standards Board) have made some major changes with respect to
accounting standards for leases. To meet these new standards for leases,
property tenants and equipment lessees are required to make significant changes
in accounting and reporting for most leases (i.e., rental contracts) on their
balance sheets as lease liabilities with corresponding right-of-use-assets.

Oracle
Property Manager is an Oracle E-Business Suite application that is designed to
manage major real estate leases, including lease administration and office
space allocation. Landlords, tenants, and sub-lessors can assign, administer,
view, and modify space assignments to manage their space efficiently using
Oracle Property Manager. They can abstract leases and administer lease contract
terms effectively using Oracle Property Manager to calculate rent increases
based on fixed percentages or a specified index and manage variable rent.
Landlords can calculate and recover expenses such as those for common area
maintenance from tenants; tenants can create operating expense agreements when
required to pay the landlord a pro rata share of operating expenses for a
property.

Currently, Oracle Property
Manager is designed to create and manage operating expense agreements. In
response to the new IFRS 16 and ASC 842 accounting standards, we plan to
enhance Oracle Property Manager to address the requirements for tenants to
recognize most leases rental contracts on the balance sheets as lease
liabilities with corresponding right-of-use-assets.

For more information on the high level changes that are planned now and how Oracle Property
Manager product strategy is planning to meet these requirements, refer to the
community posting PN Statement of Direction 5-July-16.

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