Lease amortization calculator for IFRS 16, ASC 842 and ASPE
Short answer
A lessee's lease liability is the present value of the remaining lease payments, discounted at the rate implicit in the lease or the incremental borrowing rate. The right-of-use asset starts as that liability plus initial direct costs, minus lease incentives received, and both are then unwound period by period.
Lease liability at commencement
$259,920.94
Current $45,954.85 · non-current $213,966.09
Initial right-of-use asset
$256,920.94
Liability $259,920.94 + IDC $2,000.00 − incentives $5,000.00
Total payments
$300,000.00
Total interest
$40,079.06
Total lease expense
$297,000.00
Asset life
60 months
| Period | Date | Opening balance | Lease payment | Interest expense | Principal reduction | Closing balance |
|---|---|---|---|---|---|---|
| Month 1 | 2027-01-01 | $259,920.94 | $5,000.00 | $1,274.60 | $3,725.40 | $256,195.54 |
| Month 2 | 2027-02-01 | $256,195.54 | $5,000.00 | $1,255.98 | $3,744.02 | $252,451.52 |
| Month 3 | 2027-03-01 | $252,451.52 | $5,000.00 | $1,237.26 | $3,762.74 | $248,688.78 |
| Month 4 | 2027-04-01 | $248,688.78 | $5,000.00 | $1,218.44 | $3,781.56 | $244,907.22 |
| Month 5 | 2027-05-01 | $244,907.22 | $5,000.00 | $1,199.54 | $3,800.46 | $241,106.76 |
| Month 6 | 2027-06-01 | $241,106.76 | $5,000.00 | $1,180.53 | $3,819.47 | $237,287.29 |
| Month 7 | 2027-07-01 | $237,287.29 | $5,000.00 | $1,161.44 | $3,838.56 | $233,448.73 |
| Month 8 | 2027-08-01 | $233,448.73 | $5,000.00 | $1,142.24 | $3,857.76 | $229,590.97 |
| Month 9 | 2027-09-01 | $229,590.97 | $5,000.00 | $1,122.95 | $3,877.05 | $225,713.92 |
| Month 10 | 2027-10-01 | $225,713.92 | $5,000.00 | $1,103.57 | $3,896.43 | $221,817.49 |
| Month 11 | 2027-11-01 | $221,817.49 | $5,000.00 | $1,084.09 | $3,915.91 | $217,901.58 |
| Month 12 | 2027-12-01 | $217,901.58 | $5,000.00 | $1,064.51 | $3,935.49 | $213,966.09 |
| Month 13 | 2028-01-01 | $213,966.09 | $5,000.00 | $1,044.83 | $3,955.17 | $210,010.92 |
| Month 14 | 2028-02-01 | $210,010.92 | $5,000.00 | $1,025.05 | $3,974.95 | $206,035.97 |
| Month 15 | 2028-03-01 | $206,035.97 | $5,000.00 | $1,005.18 | $3,994.82 | $202,041.15 |
| Month 16 | 2028-04-01 | $202,041.15 | $5,000.00 | $985.21 | $4,014.79 | $198,026.36 |
| Month 17 | 2028-05-01 | $198,026.36 | $5,000.00 | $965.13 | $4,034.87 | $193,991.49 |
| Month 18 | 2028-06-01 | $193,991.49 | $5,000.00 | $944.96 | $4,055.04 | $189,936.45 |
| Month 19 | 2028-07-01 | $189,936.45 | $5,000.00 | $924.68 | $4,075.32 | $185,861.13 |
| Month 20 | 2028-08-01 | $185,861.13 | $5,000.00 | $904.31 | $4,095.69 | $181,765.44 |
| Month 21 | 2028-09-01 | $181,765.44 | $5,000.00 | $883.83 | $4,116.17 | $177,649.27 |
| Month 22 | 2028-10-01 | $177,649.27 | $5,000.00 | $863.25 | $4,136.75 | $173,512.52 |
| Month 23 | 2028-11-01 | $173,512.52 | $5,000.00 | $842.56 | $4,157.44 | $169,355.08 |
| Month 24 | 2028-12-01 | $169,355.08 | $5,000.00 | $821.78 | $4,178.22 | $165,176.86 |
| Month 25 | 2029-01-01 | $165,176.86 | $5,000.00 | $800.88 | $4,199.12 | $160,977.74 |
| Month 26 | 2029-02-01 | $160,977.74 | $5,000.00 | $779.89 | $4,220.11 | $156,757.63 |
| Month 27 | 2029-03-01 | $156,757.63 | $5,000.00 | $758.79 | $4,241.21 | $152,516.42 |
| Month 28 | 2029-04-01 | $152,516.42 | $5,000.00 | $737.58 | $4,262.42 | $148,254.00 |
| Month 29 | 2029-05-01 | $148,254.00 | $5,000.00 | $716.27 | $4,283.73 | $143,970.27 |
| Month 30 | 2029-06-01 | $143,970.27 | $5,000.00 | $694.85 | $4,305.15 | $139,665.12 |
| Month 31 | 2029-07-01 | $139,665.12 | $5,000.00 | $673.33 | $4,326.67 | $135,338.45 |
| Month 32 | 2029-08-01 | $135,338.45 | $5,000.00 | $651.69 | $4,348.31 | $130,990.14 |
| Month 33 | 2029-09-01 | $130,990.14 | $5,000.00 | $629.95 | $4,370.05 | $126,620.09 |
| Month 34 | 2029-10-01 | $126,620.09 | $5,000.00 | $608.10 | $4,391.90 | $122,228.19 |
| Month 35 | 2029-11-01 | $122,228.19 | $5,000.00 | $586.14 | $4,413.86 | $117,814.33 |
| Month 36 | 2029-12-01 | $117,814.33 | $5,000.00 | $564.07 | $4,435.93 | $113,378.40 |
| Month 37 | 2030-01-01 | $113,378.40 | $5,000.00 | $541.89 | $4,458.11 | $108,920.29 |
| Month 38 | 2030-02-01 | $108,920.29 | $5,000.00 | $519.60 | $4,480.40 | $104,439.89 |
| Month 39 | 2030-03-01 | $104,439.89 | $5,000.00 | $497.20 | $4,502.80 | $99,937.09 |
| Month 40 | 2030-04-01 | $99,937.09 | $5,000.00 | $474.69 | $4,525.31 | $95,411.78 |
| Month 41 | 2030-05-01 | $95,411.78 | $5,000.00 | $452.06 | $4,547.94 | $90,863.84 |
| Month 42 | 2030-06-01 | $90,863.84 | $5,000.00 | $429.32 | $4,570.68 | $86,293.16 |
| Month 43 | 2030-07-01 | $86,293.16 | $5,000.00 | $406.47 | $4,593.53 | $81,699.63 |
| Month 44 | 2030-08-01 | $81,699.63 | $5,000.00 | $383.50 | $4,616.50 | $77,083.13 |
| Month 45 | 2030-09-01 | $77,083.13 | $5,000.00 | $360.42 | $4,639.58 | $72,443.55 |
| Month 46 | 2030-10-01 | $72,443.55 | $5,000.00 | $337.22 | $4,662.78 | $67,780.77 |
| Month 47 | 2030-11-01 | $67,780.77 | $5,000.00 | $313.90 | $4,686.10 | $63,094.67 |
| Month 48 | 2030-12-01 | $63,094.67 | $5,000.00 | $290.47 | $4,709.53 | $58,385.14 |
| Month 49 | 2031-01-01 | $58,385.14 | $5,000.00 | $266.93 | $4,733.07 | $53,652.07 |
| Month 50 | 2031-02-01 | $53,652.07 | $5,000.00 | $243.26 | $4,756.74 | $48,895.33 |
| Month 51 | 2031-03-01 | $48,895.33 | $5,000.00 | $219.48 | $4,780.52 | $44,114.81 |
| Month 52 | 2031-04-01 | $44,114.81 | $5,000.00 | $195.57 | $4,804.43 | $39,310.38 |
| Month 53 | 2031-05-01 | $39,310.38 | $5,000.00 | $171.55 | $4,828.45 | $34,481.93 |
| Month 54 | 2031-06-01 | $34,481.93 | $5,000.00 | $147.41 | $4,852.59 | $29,629.34 |
| Month 55 | 2031-07-01 | $29,629.34 | $5,000.00 | $123.15 | $4,876.85 | $24,752.49 |
| Month 56 | 2031-08-01 | $24,752.49 | $5,000.00 | $98.76 | $4,901.24 | $19,851.25 |
| Month 57 | 2031-09-01 | $19,851.25 | $5,000.00 | $74.26 | $4,925.74 | $14,925.51 |
| Month 58 | 2031-10-01 | $14,925.51 | $5,000.00 | $49.63 | $4,950.37 | $9,975.14 |
| Month 59 | 2031-11-01 | $9,975.14 | $5,000.00 | $24.86 | $4,975.14 | $5,000.00 |
| Month 60 | 2031-12-01 | $5,000.00 | $5,000.00 | $0.00 | $5,000.00 | $0.00 |
| Total | $300,000.00 | $40,079.06 | $259,920.94 | $0.00 | ||
How is the right-of-use (ROU) asset calculated?
Under IFRS 16 and ASC 842, the ROU asset at commencement equals the lease liability, plus initial direct costs, minus lease incentives received.
For a 60-month lease of $5,000 a month paid in advance at 6%, the lease liability is $259,920.94. Adding $2,000 of initial direct costs and subtracting a $5,000 incentive gives an ROU asset of $256,920.94.
Under ASPE 3065, a capital lease asset is recorded at the present value of the minimum lease payments, capped at the asset's fair value.
How do IFRS 16, ASC 842 and ASPE differ for lessees?
| IFRS 16 | ASC 842 (US GAAP) | ASPE 3065 | |
|---|---|---|---|
| Lessee model | Single model: almost all leases on balance sheet | Finance or operating, both on balance sheet | Capital (on balance sheet) or operating (off) |
| Expense pattern | Depreciation + interest, front-loaded | Finance: front-loaded. Operating: straight-line single cost | Capital: amortization + interest. Operating: straight-line rent |
| Initial asset | Liability + IDC − incentives | Liability + IDC − incentives | PV of minimum lease payments, not above fair value |
| Discount rate | Implicit rate, else incremental borrowing rate | Implicit rate, else IBR (private companies may use a risk-free rate) | Lower of implicit rate (if known) and IBR |
| Short-term exemption | 12 months or less, election | 12 months or less, election | Not applicable |
Why calculate lease interest daily instead of monthly?
Daily discounting counts the actual days between payments, as Excel's XNPV does: each payment is discounted by (1 + r) raised to (days from commencement ÷ 365). A flat monthly rate treats February and March as equal.
In the example, daily discounting gives a lease liability of $260,884.98 against $259,920.94 with a flat 0.5% monthly rate, a difference of $964.04.
To match XNPV in Excel, put the commencement date with a zero cash flow as the first row, then each payment on its due date.
How is the lease liability unwound each period?
Each period's interest is the opening balance, net of any payment made in advance, times the period's rate.
The principal reduction is the payment minus that interest, and the closing balance is the opening balance plus interest minus the payment.
Rounding interest to the cent leaves a few cents over a long lease. The calculator absorbs that residue in the last period that accrues interest, so the liability closes at exactly 0.00.
How do I build a lease amortization schedule?
- 1
List the lease payments and dates
Include fixed payments and escalations over the lease term, and note whether each payment is due at the start (in advance) or end (in arrears) of its period.
- 2
Choose the discount rate
Use the rate implicit in the lease if it can be determined, otherwise your incremental borrowing rate. ASPE uses the lower of the two when the implicit rate is known.
- 3
Discount the payments to commencement
The present value of the payments is the lease liability. Daily discounting uses (1 + r)^(days / 365) for each payment date, like Excel's XNPV.
- 4
Measure the right-of-use asset
Under IFRS 16 and ASC 842, the ROU asset is the lease liability plus initial direct costs, minus lease incentives received (plus any payments made before commencement).
- 5
Unwind each period
Interest = opening balance × the period rate (net of any payment in advance). Principal = payment − interest. Closing balance = opening + interest − payment, ending at zero.
Frequently asked questions
What is the difference between a finance lease and an operating lease under ASC 842?
Both put a lease liability and ROU asset on the balance sheet. A finance lease shows interest and amortization separately, so expense is higher early on. An operating lease shows one straight-line lease cost. In the example, first-year expense is $65,429.39 as a finance lease versus $59,400.00 as an operating lease.
Does ASPE require leases on the balance sheet?
Only capital leases. Under ASPE Section 3065 a lessee capitalizes a lease when ownership transfers or there is a bargain purchase option, the term is 75% or more of the asset's economic life, or the present value of the minimum lease payments is 90% or more of its fair value. Other leases are operating leases expensed straight-line.
Where do these numbers come from?
Measurement follows IFRS 16 Leases IFRS Foundation, FASB ASC Topic 842 FASB and CPA Canada Handbook Section 3065 CPA Canada Handbook. Classification tests use the common 75% of economic life and 90% of fair value thresholds.
This tool supports, but does not replace, professional judgment: lease identification, the lease term, variable payments and remeasurements are not modelled.