Lease Term calculation (months) [IFRS16:18]
Logically, there should be only one of the options selected - either to extend, or to terminate.
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Depreciation Term calculation (months) [IFRS16:32]
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Payments per Year calculation
Payment Frequency
- Weekly: Payments per Year = 52
- Fortnightly: Payments per Year = 26
- Monthly: Payments per Year = 12
- Quarterly: Payments per Year = 4
- Semi-Annual: Payments per Year = 2
- Annual: Payments per Year = 1
Number of Payments = Lease Term (months) [IFRS16:18] / 12 * Payments per Year
Lease Payment Amount calculation [IFRS16:27a]
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PV of Amounts Due at Lease Term
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PV of Amounts Due at Lease Term = PV (Discount Rate, Number of Payments, Amount Due at Lease Term)
Present Value of Lease Payments = PV (Discount Rate, Number of Payments, Lease Payments)
Based on Lease Setup PV calculation is done either Power formula or taking APR and dividing it over the periods.
PV calculation with Power Formula
In the system, an Excel equivalent XNPV is being used
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where:
- di = the i-th, or last, payment date.
- d1 = the 0-th payment date.
- Pi = the i-th, or last, payment.
System uses 360/30 convention. Calculating that there are 360 days in a year and every month gets 30 as payments monthly are equal.
PV calculation with flat Rate
In the system, an Excel equivalent NPV is being used
where:
- r - APR divided by accounting periods (usually APR/12)
- Cn = the n-th, or last, payment.
Lease Liability at Commencement Date calculation
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Right-of-Use Asset at Commencement Date calculation
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Calculation exceptions for TRANSITION leases
Right-of-Use Asset at Transition Date = Lease Liability at Transition Date
Calculation exceptions for Migration lease
Lease Liability at Migration Date - field entered in Migration tab. In first month remeasurement done to get system favourable amounts.
Right-of-Use at Migration Date - calculated from Historical asset cost - Accum. Depreciation at Migration
- At Migration Lease Liability and RoU has to be the same. Difference between them is posted in equity or some balancing account.