ASC 842 accounting for a retail lease
Retail leases combine long terms, base rent with escalations, and frequently tenant improvement allowances (lease incentives) that reduce the ROU asset.
Typical term: 120 months (~10 yr)Paid in advance
How to account for it
What to watch for on a retail lease
Model tenant-improvement allowances as lease incentives — they reduce the right-of-use asset at commencement. Percentage rent that is variable and not based on an index is excluded from the lease payments.
Worked example
No account neededA retail lease, computed live
This calculator is pre-loaded with a representative retail lease. Change any field to match your lease — the present value, right-of-use asset, lease liability, schedule and disclosures recompute instantly.
ASC 842 · 120 periods · commencing Jan 1, 2026
Initial lease liability
$765,519.04
PV of lease payments
Right-of-use asset
$715,519.04
At commencement
Total lease cost
$1,025,524.60
Over the full term
Straight-line cost
$8,546.04
Per period
| # | Date | Payment | Interest | Principal | Liability | ROU amort. | ROU asset |
|---|---|---|---|---|---|---|---|
| 1 | Jan 1, 2026 | $8,000.00 | $4,418.87 | $3,581.13 | $761,937.91 | $4,127.17 | $711,391.87 |
| 2 | Feb 1, 2026 | $8,000.00 | $4,397.97 | $3,602.03 | $758,335.88 | $4,148.07 | $707,243.80 |
| 3 | Mar 1, 2026 | $8,000.00 | $4,376.96 | $3,623.04 | $754,712.84 | $4,169.08 | $703,074.72 |
| 4 | Apr 1, 2026 | $8,000.00 | $4,355.82 | $3,644.18 | $751,068.66 | $4,190.22 | $698,884.50 |
| 5 | May 1, 2026 | $8,000.00 | $4,334.57 | $3,665.43 | $747,403.23 | $4,211.47 | $694,673.03 |
| 6 | Jun 1, 2026 | $8,000.00 | $4,313.18 | $3,686.82 | $743,716.41 | $4,232.86 | $690,440.17 |
| 7 | Jul 1, 2026 | $8,000.00 | $4,291.68 | $3,708.32 | $740,008.09 | $4,254.36 | $686,185.81 |
| 8 | Aug 1, 2026 | $8,000.00 | $4,270.05 | $3,729.95 | $736,278.14 | $4,275.99 | $681,909.82 |
| 9 | Sep 1, 2026 | $8,000.00 | $4,248.29 | $3,751.71 | $732,526.43 | $4,297.75 | $677,612.07 |
| 10 | Oct 1, 2026 | $8,000.00 | $4,226.40 | $3,773.60 | $728,752.83 | $4,319.64 | $673,292.43 |
| 11 | Nov 1, 2026 | $8,000.00 | $4,204.40 | $3,795.60 | $724,957.23 | $4,341.64 | $668,950.79 |
| 12 | Dec 1, 2026 | $8,000.00 | $4,182.25 | $3,817.75 | $721,139.48 | $4,363.79 | $664,587.00 |
| 13 | Jan 1, 2027 | $8,200.00 | $4,158.81 | $4,041.19 | $717,098.29 | $4,387.23 | $660,199.77 |
| 14 | Feb 1, 2027 | $8,200.00 | $4,135.24 | $4,064.76 | $713,033.53 | $4,410.80 | $655,788.97 |
| 15 | Mar 1, 2027 | $8,200.00 | $4,111.53 | $4,088.47 | $708,945.06 | $4,434.51 | $651,354.46 |
| 16 | Apr 1, 2027 | $8,200.00 | $4,087.68 | $4,112.32 | $704,832.74 | $4,458.36 | $646,896.10 |
| 17 | May 1, 2027 | $8,200.00 | $4,063.69 | $4,136.31 | $700,696.43 | $4,482.35 | $642,413.75 |
| 18 | Jun 1, 2027 | $8,200.00 | $4,039.56 | $4,160.44 | $696,535.99 | $4,506.48 | $637,907.27 |
| 19 | Jul 1, 2027 | $8,200.00 | $4,015.29 | $4,184.71 | $692,351.28 | $4,530.75 | $633,376.52 |
| 20 | Aug 1, 2027 | $8,200.00 | $3,990.89 | $4,209.11 | $688,142.17 | $4,555.15 | $628,821.37 |
| 21 | Sep 1, 2027 | $8,200.00 | $3,966.33 | $4,233.67 | $683,908.50 | $4,579.71 | $624,241.66 |
| 22 | Oct 1, 2027 | $8,200.00 | $3,941.63 | $4,258.37 | $679,650.13 | $4,604.41 | $619,637.25 |
| 23 | Nov 1, 2027 | $8,200.00 | $3,916.79 | $4,283.21 | $675,366.92 | $4,629.25 | $615,008.00 |
| 24 | Dec 1, 2027 | $8,200.00 | $3,891.81 | $4,308.19 | $671,058.73 | $4,654.23 | $610,353.77 |
| 25 | Jan 1, 2028 | $8,405.00 | $3,865.48 | $4,539.52 | $666,519.21 | $4,680.56 | $605,673.21 |
| 26 | Feb 1, 2028 | $8,405.00 | $3,839.00 | $4,566.00 | $661,953.21 | $4,707.04 | $600,966.17 |
| 27 | Mar 1, 2028 | $8,405.00 | $3,812.36 | $4,592.64 | $657,360.57 | $4,733.68 | $596,232.49 |
| 28 | Apr 1, 2028 | $8,405.00 | $3,785.58 | $4,619.42 | $652,741.15 | $4,760.46 | $591,472.03 |
| 29 | May 1, 2028 | $8,405.00 | $3,758.62 | $4,646.38 | $648,094.77 | $4,787.42 | $586,684.61 |
| 30 | Jun 1, 2028 | $8,405.00 | $3,731.53 | $4,673.47 | $643,421.30 | $4,814.51 | $581,870.10 |
| 31 | Jul 1, 2028 | $8,405.00 | $3,704.26 | $4,700.74 | $638,720.56 | $4,841.78 | $577,028.32 |
| 32 | Aug 1, 2028 | $8,405.00 | $3,676.84 | $4,728.16 | $633,992.40 | $4,869.20 | $572,159.12 |
| 33 | Sep 1, 2028 | $8,405.00 | $3,649.26 | $4,755.74 | $629,236.66 | $4,896.78 | $567,262.34 |
| 34 | Oct 1, 2028 | $8,405.00 | $3,621.52 | $4,783.48 | $624,453.18 | $4,924.52 | $562,337.82 |
| 35 | Nov 1, 2028 | $8,405.00 | $3,593.61 | $4,811.39 | $619,641.79 | $4,952.43 | $557,385.39 |
| 36 | Dec 1, 2028 | $8,405.00 | $3,565.55 | $4,839.45 | $614,802.34 | $4,980.49 | $552,404.90 |
| 37 | Jan 1, 2029 | $8,615.12 | $3,536.09 | $5,079.03 | $609,723.31 | $5,009.95 | $547,394.95 |
| 38 | Feb 1, 2029 | $8,615.12 | $3,506.47 | $5,108.65 | $604,614.66 | $5,039.57 | $542,355.38 |
| 39 | Mar 1, 2029 | $8,615.12 | $3,476.66 | $5,138.46 | $599,476.20 | $5,069.38 | $537,286.00 |
| 40 | Apr 1, 2029 | $8,615.12 | $3,446.69 | $5,168.43 | $594,307.77 | $5,099.35 | $532,186.65 |
| 41 | May 1, 2029 | $8,615.12 | $3,416.54 | $5,198.58 | $589,109.19 | $5,129.50 | $527,057.15 |
| 42 | Jun 1, 2029 | $8,615.12 | $3,386.22 | $5,228.90 | $583,880.29 | $5,159.82 | $521,897.33 |
| 43 | Jul 1, 2029 | $8,615.12 | $3,355.71 | $5,259.41 | $578,620.88 | $5,190.33 | $516,707.00 |
| 44 | Aug 1, 2029 | $8,615.12 | $3,325.03 | $5,290.09 | $573,330.79 | $5,221.01 | $511,485.99 |
| 45 | Sep 1, 2029 | $8,615.12 | $3,294.18 | $5,320.94 | $568,009.85 | $5,251.86 | $506,234.13 |
| 46 | Oct 1, 2029 | $8,615.12 | $3,263.13 | $5,351.99 | $562,657.86 | $5,282.91 | $500,951.22 |
| 47 | Nov 1, 2029 | $8,615.12 | $3,231.92 | $5,383.20 | $557,274.66 | $5,314.12 | $495,637.10 |
| 48 | Dec 1, 2029 | $8,615.12 | $3,200.51 | $5,414.61 | $551,860.05 | $5,345.53 | $490,291.57 |
| 49 | Jan 1, 2030 | $8,830.50 | $3,167.68 | $5,662.82 | $546,197.23 | $5,378.36 | $484,913.21 |
| 50 | Feb 1, 2030 | $8,830.50 | $3,134.64 | $5,695.86 | $540,501.37 | $5,411.40 | $479,501.81 |
| 51 | Mar 1, 2030 | $8,830.50 | $3,101.41 | $5,729.09 | $534,772.28 | $5,444.63 | $474,057.18 |
| 52 | Apr 1, 2030 | $8,830.50 | $3,067.99 | $5,762.51 | $529,009.77 | $5,478.05 | $468,579.13 |
| 53 | May 1, 2030 | $8,830.50 | $3,034.38 | $5,796.12 | $523,213.65 | $5,511.66 | $463,067.47 |
| 54 | Jun 1, 2030 | $8,830.50 | $3,000.57 | $5,829.93 | $517,383.72 | $5,545.47 | $457,522.00 |
| 55 | Jul 1, 2030 | $8,830.50 | $2,966.56 | $5,863.94 | $511,519.78 | $5,579.48 | $451,942.52 |
| 56 | Aug 1, 2030 | $8,830.50 | $2,932.36 | $5,898.14 | $505,621.64 | $5,613.68 | $446,328.84 |
| 57 | Sep 1, 2030 | $8,830.50 | $2,897.94 | $5,932.56 | $499,689.08 | $5,648.10 | $440,680.74 |
| 58 | Oct 1, 2030 | $8,830.50 | $2,863.35 | $5,967.15 | $493,721.93 | $5,682.69 | $434,998.05 |
| 59 | Nov 1, 2030 | $8,830.50 | $2,828.53 | $6,001.97 | $487,719.96 | $5,717.51 | $429,280.54 |
| 60 | Dec 1, 2030 | $8,830.50 | $2,793.52 | $6,036.98 | $481,682.98 | $5,752.52 | $423,528.02 |
| 61 | Jan 1, 2031 | $9,051.27 | $2,757.02 | $6,294.25 | $475,388.73 | $5,789.02 | $417,739.00 |
| 62 | Feb 1, 2031 | $9,051.27 | $2,720.30 | $6,330.97 | $469,057.76 | $5,825.74 | $411,913.26 |
| 63 | Mar 1, 2031 | $9,051.27 | $2,683.37 | $6,367.90 | $462,689.86 | $5,862.67 | $406,050.59 |
| 64 | Apr 1, 2031 | $9,051.27 | $2,646.23 | $6,405.04 | $456,284.82 | $5,899.81 | $400,150.78 |
| 65 | May 1, 2031 | $9,051.27 | $2,608.86 | $6,442.41 | $449,842.41 | $5,937.18 | $394,213.60 |
| 66 | Jun 1, 2031 | $9,051.27 | $2,571.28 | $6,479.99 | $443,362.42 | $5,974.76 | $388,238.84 |
| 67 | Jul 1, 2031 | $9,051.27 | $2,533.48 | $6,517.79 | $436,844.63 | $6,012.56 | $382,226.28 |
| 68 | Aug 1, 2031 | $9,051.27 | $2,495.46 | $6,555.81 | $430,288.82 | $6,050.58 | $376,175.70 |
| 69 | Sep 1, 2031 | $9,051.27 | $2,457.22 | $6,594.05 | $423,694.77 | $6,088.82 | $370,086.88 |
| 70 | Oct 1, 2031 | $9,051.27 | $2,418.76 | $6,632.51 | $417,062.26 | $6,127.28 | $363,959.60 |
| 71 | Nov 1, 2031 | $9,051.27 | $2,380.06 | $6,671.21 | $410,391.05 | $6,165.98 | $357,793.62 |
| 72 | Dec 1, 2031 | $9,051.27 | $2,341.15 | $6,710.12 | $403,680.93 | $6,204.89 | $351,588.73 |
| 73 | Jan 1, 2032 | $9,277.55 | $2,300.69 | $6,976.86 | $396,704.07 | $6,245.35 | $345,343.38 |
| 74 | Feb 1, 2032 | $9,277.55 | $2,259.98 | $7,017.57 | $389,686.50 | $6,286.06 | $339,057.32 |
| 75 | Mar 1, 2032 | $9,277.55 | $2,219.06 | $7,058.49 | $382,628.01 | $6,326.98 | $332,730.34 |
| 76 | Apr 1, 2032 | $9,277.55 | $2,177.87 | $7,099.68 | $375,528.33 | $6,368.17 | $326,362.17 |
| 77 | May 1, 2032 | $9,277.55 | $2,136.47 | $7,141.08 | $368,387.25 | $6,409.57 | $319,952.60 |
| 78 | Jun 1, 2032 | $9,277.55 | $2,094.80 | $7,182.75 | $361,204.50 | $6,451.24 | $313,501.36 |
| 79 | Jul 1, 2032 | $9,277.55 | $2,052.91 | $7,224.64 | $353,979.86 | $6,493.13 | $307,008.23 |
| 80 | Aug 1, 2032 | $9,277.55 | $2,010.76 | $7,266.79 | $346,713.07 | $6,535.28 | $300,472.95 |
| 81 | Sep 1, 2032 | $9,277.55 | $1,968.38 | $7,309.17 | $339,403.90 | $6,577.66 | $293,895.29 |
| 82 | Oct 1, 2032 | $9,277.55 | $1,925.74 | $7,351.81 | $332,052.09 | $6,620.30 | $287,274.99 |
| 83 | Nov 1, 2032 | $9,277.55 | $1,882.85 | $7,394.70 | $324,657.39 | $6,663.19 | $280,611.80 |
| 84 | Dec 1, 2032 | $9,277.55 | $1,839.71 | $7,437.84 | $317,219.55 | $6,706.33 | $273,905.47 |
| 85 | Jan 1, 2033 | $9,509.49 | $1,794.98 | $7,714.51 | $309,505.04 | $6,751.06 | $267,154.41 |
| 86 | Feb 1, 2033 | $9,509.49 | $1,749.97 | $7,759.52 | $301,745.52 | $6,796.07 | $260,358.34 |
| 87 | Mar 1, 2033 | $9,509.49 | $1,704.71 | $7,804.78 | $293,940.74 | $6,841.33 | $253,517.01 |
| 88 | Apr 1, 2033 | $9,509.49 | $1,659.18 | $7,850.31 | $286,090.43 | $6,886.86 | $246,630.15 |
| 89 | May 1, 2033 | $9,509.49 | $1,613.39 | $7,896.10 | $278,194.33 | $6,932.65 | $239,697.50 |
| 90 | Jun 1, 2033 | $9,509.49 | $1,567.33 | $7,942.16 | $270,252.17 | $6,978.71 | $232,718.79 |
| 91 | Jul 1, 2033 | $9,509.49 | $1,521.00 | $7,988.49 | $262,263.68 | $7,025.04 | $225,693.75 |
| 92 | Aug 1, 2033 | $9,509.49 | $1,474.40 | $8,035.09 | $254,228.59 | $7,071.64 | $218,622.11 |
| 93 | Sep 1, 2033 | $9,509.49 | $1,427.53 | $8,081.96 | $246,146.63 | $7,118.51 | $211,503.60 |
| 94 | Oct 1, 2033 | $9,509.49 | $1,380.38 | $8,129.11 | $238,017.52 | $7,165.66 | $204,337.94 |
| 95 | Nov 1, 2033 | $9,509.49 | $1,332.96 | $8,176.53 | $229,840.99 | $7,213.08 | $197,124.86 |
| 96 | Dec 1, 2033 | $9,509.49 | $1,285.27 | $8,224.22 | $221,616.77 | $7,260.77 | $189,864.09 |
| 97 | Jan 1, 2034 | $9,747.22 | $1,235.91 | $8,511.31 | $213,105.46 | $7,310.13 | $182,553.96 |
| 98 | Feb 1, 2034 | $9,747.22 | $1,186.25 | $8,560.97 | $204,544.49 | $7,359.79 | $175,194.17 |
| 99 | Mar 1, 2034 | $9,747.22 | $1,136.32 | $8,610.90 | $195,933.59 | $7,409.72 | $167,784.45 |
| 100 | Apr 1, 2034 | $9,747.22 | $1,086.09 | $8,661.13 | $187,272.46 | $7,459.95 | $160,324.50 |
| 101 | May 1, 2034 | $9,747.22 | $1,035.56 | $8,711.66 | $178,560.80 | $7,510.48 | $152,814.02 |
| 102 | Jun 1, 2034 | $9,747.22 | $984.75 | $8,762.47 | $169,798.33 | $7,561.29 | $145,252.73 |
| 103 | Jul 1, 2034 | $9,747.22 | $933.63 | $8,813.59 | $160,984.74 | $7,612.41 | $137,640.32 |
| 104 | Aug 1, 2034 | $9,747.22 | $882.22 | $8,865.00 | $152,119.74 | $7,663.82 | $129,976.50 |
| 105 | Sep 1, 2034 | $9,747.22 | $830.50 | $8,916.72 | $143,203.02 | $7,715.54 | $122,260.96 |
| 106 | Oct 1, 2034 | $9,747.22 | $778.50 | $8,968.72 | $134,234.30 | $7,767.54 | $114,493.42 |
| 107 | Nov 1, 2034 | $9,747.22 | $726.17 | $9,021.05 | $125,213.25 | $7,819.87 | $106,673.55 |
| 108 | Dec 1, 2034 | $9,747.22 | $673.55 | $9,073.67 | $116,139.58 | $7,872.49 | $98,801.06 |
| 109 | Jan 1, 2035 | $9,990.90 | $619.20 | $9,371.70 | $106,767.88 | $7,926.84 | $90,874.22 |
| 110 | Feb 1, 2035 | $9,990.90 | $564.54 | $9,426.36 | $97,341.52 | $7,981.50 | $82,892.72 |
| 111 | Mar 1, 2035 | $9,990.90 | $509.54 | $9,481.36 | $87,860.16 | $8,036.50 | $74,856.22 |
| 112 | Apr 1, 2035 | $9,990.90 | $454.24 | $9,536.66 | $78,323.50 | $8,091.80 | $66,764.42 |
| 113 | May 1, 2035 | $9,990.90 | $398.61 | $9,592.29 | $68,731.21 | $8,147.43 | $58,616.99 |
| 114 | Jun 1, 2035 | $9,990.90 | $342.65 | $9,648.25 | $59,082.96 | $8,203.39 | $50,413.60 |
| 115 | Jul 1, 2035 | $9,990.90 | $286.37 | $9,704.53 | $49,378.43 | $8,259.67 | $42,153.93 |
| 116 | Aug 1, 2035 | $9,990.90 | $229.76 | $9,761.14 | $39,617.29 | $8,316.28 | $33,837.65 |
| 117 | Sep 1, 2035 | $9,990.90 | $172.82 | $9,818.08 | $29,799.21 | $8,373.22 | $25,464.43 |
| 118 | Oct 1, 2035 | $9,990.90 | $115.55 | $9,875.35 | $19,923.86 | $8,430.49 | $17,033.94 |
| 119 | Nov 1, 2035 | $9,990.90 | $57.94 | $9,932.96 | $9,990.90 | $8,488.10 | $8,545.84 |
| 120 | Dec 1, 2035 | $9,990.90 | $0.00 | $9,990.90 | $0.00 | $8,545.84 | $0.00 |
Citations & method
- • ASC 842-20-30-1 — initial measurement of the lease liability at the present value of lease payments.
- • ASC 842-20-30-5 — the right-of-use asset comprises the initial liability, prepaid lease payments and initial direct costs, less lease incentives received.
- • ASC 842-20-25-6 — a single lease cost is recognised on a straight-line basis over the lease term for an operating lease.
- • ASC 842-10-25-2 — the five criteria for finance-lease classification.
- • ASC 842-20-50 — quantitative disclosure requirements (weighted-average term/rate, maturity analysis).
- Discount rate applied as a nominal monthly rate: 7.000% ÷ periods-per-year.
- Payments treated as made in advance (annuity-due): each period's payment is applied before interest accretes.
- Operating lease: total lease cost is straight-lined; the ROU asset amortizes as the plug between straight-line cost and interest.
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