Calculation Engine
Precise, auditable lease accounting calculations, built around the requirements of IFRS 16 and FRS 102.
What the calculation engine produces
For each lease, the AuditLease calculation engine produces:
- Present value of future lease payments at the commencement date
- Initial recognition entries for the ROU asset and lease liability
- Period-by-period amortisation schedule for the lease liability (principal repayment and interest charge)
- Period-by-period depreciation schedule for the ROU asset
- Current and non-current split of the lease liability at each period end
- Remeasurement calculations when lease terms or payments change
Calculation methodology
Present value
The lease liability is calculated as the present value of future lease payments, discounted at the rate implicit in the lease or the lessee's incremental borrowing rate (IFRS 16), or its incremental or obtainable borrowing rate (FRS 102). Payments are discounted to the commencement date using the annuity formula, consistent with IFRS 16.26 and the equivalent FRS 102 requirement.
Effective interest method
The lease liability unwinds over the lease term using the effective interest method. Each period, interest is accrued on the opening lease liability at the discount rate, and lease payments reduce the liability. This produces a precise amortisation schedule that can be agreed back to the balance sheet.
Decimal precision
Every monetary amount is held and summed as a decimal. The only floating-point steps are the power functions that compound a rate (the discount factor, the periodic interest rate and a fixed annual rent escalation), because decimal has no power function; the result of each is converted straight back to a decimal. Each schedule line is rounded half away from zero to the penny, the MidpointRounding.AwayFromZero convention consistent with standard accounting practice, and the final period clears the balance exactly.
Immutability
Completed calculation runs are immutable. Once journals have been posted from a calculation run, that run cannot be modified. Any change to a lease (a remeasurement, a modification, a change in assumptions) requires a new calculation run. The full history of all runs is preserved.
IFRS 16 and FRS 102
The calculation engine supports both IFRS 16 and the 2026 FRS 102 amendments. Each standard is implemented as a separate calculation path with the correct methodology for that standard. Entities using IFRS 16 and entities using FRS 102 can coexist within the same AuditLease account.
Related features
See the calculation engine in action
Create a free account and run your first lease calculation in minutes.
Get started free