Steps in lease accounting
Details for lease accounting
Let us assume the following details for lease accounting as per Ind AS 116
Lease start date: 1-Apr-2019
Lease end date: 31-Mar-2024
Lease payments: Rs. 2,75,000
Payment frequency: Annual – payable at the end
Incremental borrowing rate: 9%
Step 1: Calculate the right-of-use
The right-of-use is first calculated as follows:
Step 2: Prepare amortisation schedule
The amortisation schedule based on straight line method is calculated as follows:
Step 3: Calculate Lease Liability
The lease liability is computed as follows:
Step 4: Calculate the finance charges
The finance charges for the lease liability is calculated as follows:
