Lease liability
In one sentence
The lease liability is the present value of the remaining lease payments, discounted at the rate implicit in the lease or the lessee's incremental borrowing rate.
The lease liability is measured at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that is not readily determinable, the lessee's incremental borrowing rate. Each period it accretes interest and is reduced by the principal portion of the payment. The current portion is the principal due within the next 12 months.
Cite: ASC 842-20-30-1 / IFRS 16.26
Right-of-use (ROU) asset
A right-of-use asset is the lessee's right to use a leased asset over the lease term, recognised on the balance sheet at the lease liability plus prepaid payments and initial direct costs, less incentives.
Read definition →Incremental borrowing rate (IBR)
The incremental borrowing rate is the rate a lessee would pay to borrow, over a similar term and with similar security, the funds needed to obtain an asset of similar value.
Read definition →Present value of lease payments
The present value of lease payments is the sum of each future payment divided by (1 + periodic rate) raised to the number of periods until that payment.
Read definition →See Lease liability in a real calculation
Enter a lease and Ledgerage computes it — every figure traced back to the standard.