IFRS 16 · Lessee accounting
IFRS 16 lease liability calculator
Present value of the lease payments, the right-of-use asset built up line by line, the amortisation schedule to the last penny, and the maturity analysis for your disclosure note.
At commencement
Right-of-use asset
Commencement journal
Lease liability — amortisation
Maturity of lease liability IFRS 16.58 disclosure
Built for the register, not the single lease
Bulk import, group consolidation, and a disclosure note that ties
AuditLease handles the whole portfolio: CSV import, entity hierarchies and 4-4-5 period ends, remeasurement on modification, an immutable audit trail, and free read-only auditor access. Priced on lease count, not seats.
What goes into the lease payments
The measurement is straightforward once the inputs are settled. Getting the inputs right is the actual work, and IFRS 16.27 is specific about what belongs in the liability:
- Fixed payments, less any lease incentives receivable;
- Variable payments that depend on an index or rate — a CPI-linked uplift is included, measured using the index at commencement;
- amounts expected to be payable under residual value guarantees;
- the exercise price of a purchase option, where exercise is reasonably certain;
- termination penalties, unless termination is not reasonably certain.
Excluded, and this catches people out: variable payments linked to sales or usage. Turnover rent on a retail unit is not in the liability at all — it is expensed as incurred. So is any non-lease service element, such as the service charge bundled into a property rent, unless you have taken the practical expedient not to separate it.
The lease term is a judgement, not a date on the contract
The term is the non-cancellable period, plus optional extension periods where extension is reasonably certain, plus periods after a break option where you are reasonably certain not to break. "Reasonably certain" is a high hurdle, and it looks at economic incentive — significant leasehold improvements, relocation cost, whether the rent is below market. A ten-year lease with a five-year break may be a five-year lease or a ten-year lease, and the liability differs by roughly half.
How this differs from FRS 102 as amended
The lessee model is broadly the same shape. FRS 102 as amended by the FRC's 2024 periodic review is a simplified version that applies to accounting periods beginning on or after 1 January 2026, retaining some practical reliefs, whereas IFRS 16 has been in force since 2019. If you are transitioning a UK GAAP entity, the FRS 102 transition calculator is the one you want.
Modifications and remeasurement
The liability is not fixed for life. A rent review linked to an index, a change in the assessed lease term, or a modification all trigger remeasurement — and a modification requires a revised discount rate at its effective date. The adjustment normally goes against the right-of-use asset rather than through profit or loss, except on a reduction in scope, where the asset and liability come down proportionately and any difference is recognised in P&L. This calculator measures at commencement; remeasurement is where a spreadsheet stops being viable.
Common questions
Is the liability the total of the lease payments?
No — it is their present value. The difference between the two is interest, recognised over the term as the liability unwinds. Confusing the two is the most common error in first-time lease calculations.
How do I treat a service charge bundled into the rent?
Strictly, separate the non-lease service component and keep it out of the liability. IFRS 16 allows a practical expedient to treat the whole payment as a lease component by class of asset, which is simpler but inflates both the asset and the liability. Whichever you choose, apply it consistently by class and disclose it.
What about turnover rent?
Excluded from the liability and expensed as incurred, because it depends on sales rather than an index or rate. A minimum guaranteed element within a turnover rent is a fixed payment and does go in.
Are short-term and low-value leases exempt?
Yes. Leases of 12 months or less with no purchase option, and leases of low-value assets, can be expensed straight-line. Applied by class of underlying asset for short-term leases, lease-by-lease for low-value ones, and disclosed either way.
Can I trust these numbers?
The arithmetic is covered by a test suite that includes textbook annuity checks and proof that every schedule amortises to exactly zero and every journal balances. The judgements — term, rate, what counts as a lease payment — are yours, and they move the answer more than the arithmetic does.