Lease Liability (IFRS 16) Calculator
Calculate the Present Value (PV) of future lease payments for IFRS 16 compliance. Generates an amortization schedule splitting principal and interest for Right-of-Use (ROU) asset accounting.
About
Under IFRS 16, lessees must recognize nearly all leases on the balance sheet. This requires calculating the Lease Liability, which is the present value of future lease payments discounted at the incremental borrowing rate. The corresponding entry is the Right-of-Use (ROU) Asset. This calculator automates the math required for initial recognition and subsequent measurement.
Accountants often struggle with the manual segregation of interest expense and principal repayment over the lease term. This tool generates a full table showing the liability balance reduction period by period, ensuring accurate journal entries for financial reporting.
Formulas
The Lease Liability LL is the sum of the present value of the annuity payments PMT.
Where i is the periodic interest rate and n is the total number of periods. For each period t, the Interest Expense Eint is:
Reference Data
| Credit Rating | Risk Premium Spread | Base Rate (Ref) | Est. Borrowing Rate |
|---|---|---|---|
| AAA | 0.50% - 0.80% | 4.0% | 4.65% |
| AA | 0.80% - 1.10% | 4.0% | 4.95% |
| A | 1.10% - 1.40% | 4.0% | 5.25% |
| BBB | 1.40% - 2.00% | 4.0% | 5.70% |
| BB | 2.00% - 3.50% | 4.0% | 6.75% |
| B | 3.50% - 5.50% | 4.0% | 8.50% |
| CCC | 5.50% - 10.0% | 4.0% | 11.75% |
| Distressed | > 10.0% | 4.0% | 15.00%+ |