Calculations on Lease Agreement

Table of Contents

PV calculation Calculation exceptions for TRANSITION leases Calculation exceptions for Migration lease

Lease Term (months) [IFRS16:18]

logically, there should be only one of the options - either to extend or to terminate.

 

Depreciation Term (months) [IFRS16:32]

Payments per Year
Payment Frequency:

  • Weekly: Payments per Year = 52
  • Fortnightly: Payments per Year = 26
  • Monthly: Payments per Year = 12
  • Quarterly: Payments per Year = 4
  • Semi-Annual: Payments per Year = 2
  • Annual: Payments per Year = 1

Number of Payments
Number of Payments = Lease Term (months) [IFRS16:18] / 12 * Payments per Year

Lease Payment Amount [IFRS16:27a]

PV of Amounts Due at Lease Term

PV of Amounts Due at Lease Term = PV (Discount Rate, Number of Payments, Amount Due at Lease Term)

Present Value of Lease Payments = PV (Discount Rate, Number of Payments, Lease Payments)

PV calculation

In system, Excel equivalent XNPV is being used

where:

  • di = the ith, or last, payment date.
  • d1 = the 0th payment date.
  • Pi = the ith, or last, payment.

System uses 360/30 convention. Calculating that there are 360 days in a year and every month gets 30 as payments monthly are equal.

 
 

:::
Lease Liability at Commencement Date

Right-of-Use Asset at Commencement Date

Calculation exceptions for TRANSITION leases

Right-of-Use Asset at Transition Date = Lease Liability at Transition Date

 

Calculation exceptions for Migration lease

Lease Liability at Migration Date - field entered in Migration tab. In first month remeasurement done to get system favourable amounts.
Right-of-Use at Migration Date - calculated from Historical asset cost - Accum. Depreciation at Migration

  • At Migration Lease Liability and RoU has to be the same. Difference between them is posted in equity or some balancing account.