Incremental Borrowing Rates are used to discount lease cash flow to get PV of lease payments, when there is no interest rate implicit in the lease contract (most likely this is the case). Incremental Borrowing Rates should be reviewed periodically, but not necessarily monthly. Updated rates apply to new leases entered to the system

On each entity, open the Role Center and select Inc. Borrowing Rate Setup. In the window that opens, enter a new row with the updated rate. The only required field is Lessee Inc. Borrowing Rate.

Filling Incremental Borrowing Rates:

• Inc. Borrowing Rate Setup's most important field is Lessee Inc. Borrowing Rate - the rate itself.
• The Value Date column is used to determine which leases the rate will apply to. The Incremental Borrowing Rate will be applied to leases that are activated on or after the entered date.
• You can also apply different Incremental Borrowing Rate based on Lease Term. If Incremental Borrowing Rate was modified - then it will be based on remaining term.
• Incremental Borrowing Rate can be applied to leases in a specific category.
• Incremental Borrowing Rate can be applied to leases with a specific currency.
• If there are multiple countries within one environment, you can also specify the country.