IFRS 16 Lease Calculator
for General
Build the lease liability and ROU asset under IFRS 16.26. Full amortisation schedule, journal entries, and an IBR sense-check column you can paste into the file.
Lease liability, evidenced.
Not just estimated.
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IFRS 16 for General: practical guidance
Six years in, the IFRS 16 audit point is rarely the arithmetic. It is the IBR. Most files we review pull the prior-year IBR forward, sometimes adjusted with a vague reference to "current market conditions" and no documented basis. That works on a clean inspection year. It stops working when the regulator asks how the rate was derived for a 7-year warehouse lease in a different country to the parent. IFRS 16.26 wants the implicit rate if determinable, or the lessee's incremental borrowing rate — and IFRS 16.IE2 spells out what "incremental" means: this lessee, this term, this currency, this asset class, this security profile.
Measurement considerations for General
The lease liability is measured at the present value of lease payments not yet paid at the commencement date (IFRS 16.26). Lease payments are discounted using the interest rate implicit in the lease if readily determinable, or the lessee's incremental borrowing rate (IBR). The IBR is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment (IFRS 16.26(d)).
ROU asset depreciation for General
The right-of-use asset is initially measured at cost (IFRS 16.23), comprising the initial measurement of the lease liability, any lease payments made at or before commencement less any lease incentives received, initial direct costs incurred by the lessee, and an estimate of costs to dismantle and restore the underlying asset (IFRS 16.24). The ROU asset is subsequently depreciated on a straight-line basis over the shorter of the asset's useful life and the lease term, unless ownership transfers or a purchase option is reasonably certain to be exercised.
Worked Example: 5-Year Office Lease
Entity A enters a 5-year office lease commencing 1 January 2025. Monthly rent is €5,000 payable in arrears. The incremental borrowing rate is 4.5%. There are no lease incentives, initial direct costs, or restoration obligations.