ASC 842 accounting for an office lease
Office and commercial property leases are the most common ASC 842 leases — typically long-term, paid monthly in advance, and almost always operating leases with annual rent escalations.
Typical term: 84 months (~7 yr)Paid in advance
How to account for it
What to watch for on an office lease
Real-estate leases usually fail all five finance criteria (the term rarely covers a major part of the building's economic life and the present value is well below fair value), so they are operating leases with a straight-line lease cost. Watch for rent-free periods (lease incentives) and stepped rent (escalations), both of which the engine handles.
Worked example
No account neededAn office lease, computed live
This calculator is pre-loaded with a representative office lease. Change any field to match your lease — the present value, right-of-use asset, lease liability, schedule and disclosures recompute instantly.
ASC 842 · 84 periods · commencing Jan 1, 2026
Initial lease liability
$868,230.68
PV of lease payments
Right-of-use asset
$868,230.68
At commencement
Total lease cost
$1,103,394.60
Over the full term
Straight-line cost
$13,135.65
Per period
| # | Date | Payment | Interest | Principal | Liability | ROU amort. | ROU asset |
|---|---|---|---|---|---|---|---|
| 1 | Jan 1, 2026 | $12,000.00 | $4,994.68 | $7,005.32 | $861,225.36 | $8,140.97 | $860,089.71 |
| 2 | Feb 1, 2026 | $12,000.00 | $4,953.82 | $7,046.18 | $854,179.18 | $8,181.83 | $851,907.88 |
| 3 | Mar 1, 2026 | $12,000.00 | $4,912.71 | $7,087.29 | $847,091.89 | $8,222.94 | $843,684.94 |
| 4 | Apr 1, 2026 | $12,000.00 | $4,871.37 | $7,128.63 | $839,963.26 | $8,264.28 | $835,420.66 |
| 5 | May 1, 2026 | $12,000.00 | $4,829.78 | $7,170.22 | $832,793.04 | $8,305.87 | $827,114.79 |
| 6 | Jun 1, 2026 | $12,000.00 | $4,787.96 | $7,212.04 | $825,581.00 | $8,347.69 | $818,767.10 |
| 7 | Jul 1, 2026 | $12,000.00 | $4,745.89 | $7,254.11 | $818,326.89 | $8,389.76 | $810,377.34 |
| 8 | Aug 1, 2026 | $12,000.00 | $4,703.58 | $7,296.42 | $811,030.47 | $8,432.07 | $801,945.27 |
| 9 | Sep 1, 2026 | $12,000.00 | $4,661.01 | $7,338.99 | $803,691.48 | $8,474.64 | $793,470.63 |
| 10 | Oct 1, 2026 | $12,000.00 | $4,618.20 | $7,381.80 | $796,309.68 | $8,517.45 | $784,953.18 |
| 11 | Nov 1, 2026 | $12,000.00 | $4,575.14 | $7,424.86 | $788,884.82 | $8,560.51 | $776,392.67 |
| 12 | Dec 1, 2026 | $12,000.00 | $4,531.83 | $7,468.17 | $781,416.65 | $8,603.82 | $767,788.85 |
| 13 | Jan 1, 2027 | $12,360.00 | $4,486.16 | $7,873.84 | $773,542.81 | $8,649.49 | $759,139.36 |
| 14 | Feb 1, 2027 | $12,360.00 | $4,440.23 | $7,919.77 | $765,623.04 | $8,695.42 | $750,443.94 |
| 15 | Mar 1, 2027 | $12,360.00 | $4,394.04 | $7,965.96 | $757,657.08 | $8,741.61 | $741,702.33 |
| 16 | Apr 1, 2027 | $12,360.00 | $4,347.56 | $8,012.44 | $749,644.64 | $8,788.09 | $732,914.24 |
| 17 | May 1, 2027 | $12,360.00 | $4,300.83 | $8,059.17 | $741,585.47 | $8,834.82 | $724,079.42 |
| 18 | Jun 1, 2027 | $12,360.00 | $4,253.81 | $8,106.19 | $733,479.28 | $8,881.84 | $715,197.58 |
| 19 | Jul 1, 2027 | $12,360.00 | $4,206.53 | $8,153.47 | $725,325.81 | $8,929.12 | $706,268.46 |
| 20 | Aug 1, 2027 | $12,360.00 | $4,158.97 | $8,201.03 | $717,124.78 | $8,976.68 | $697,291.78 |
| 21 | Sep 1, 2027 | $12,360.00 | $4,111.13 | $8,248.87 | $708,875.91 | $9,024.52 | $688,267.26 |
| 22 | Oct 1, 2027 | $12,360.00 | $4,063.01 | $8,296.99 | $700,578.92 | $9,072.64 | $679,194.62 |
| 23 | Nov 1, 2027 | $12,360.00 | $4,014.61 | $8,345.39 | $692,233.53 | $9,121.04 | $670,073.58 |
| 24 | Dec 1, 2027 | $12,360.00 | $3,965.93 | $8,394.07 | $683,839.46 | $9,169.72 | $660,903.86 |
| 25 | Jan 1, 2028 | $12,730.80 | $3,914.80 | $8,816.00 | $675,023.46 | $9,220.85 | $651,683.01 |
| 26 | Feb 1, 2028 | $12,730.80 | $3,863.37 | $8,867.43 | $666,156.03 | $9,272.28 | $642,410.73 |
| 27 | Mar 1, 2028 | $12,730.80 | $3,811.65 | $8,919.15 | $657,236.88 | $9,324.00 | $633,086.73 |
| 28 | Apr 1, 2028 | $12,730.80 | $3,759.62 | $8,971.18 | $648,265.70 | $9,376.03 | $623,710.70 |
| 29 | May 1, 2028 | $12,730.80 | $3,707.29 | $9,023.51 | $639,242.19 | $9,428.36 | $614,282.34 |
| 30 | Jun 1, 2028 | $12,730.80 | $3,654.64 | $9,076.16 | $630,166.03 | $9,481.01 | $604,801.33 |
| 31 | Jul 1, 2028 | $12,730.80 | $3,601.71 | $9,129.09 | $621,036.94 | $9,533.94 | $595,267.39 |
| 32 | Aug 1, 2028 | $12,730.80 | $3,548.45 | $9,182.35 | $611,854.59 | $9,587.20 | $585,680.19 |
| 33 | Sep 1, 2028 | $12,730.80 | $3,494.89 | $9,235.91 | $602,618.68 | $9,640.76 | $576,039.43 |
| 34 | Oct 1, 2028 | $12,730.80 | $3,441.01 | $9,289.79 | $593,328.89 | $9,694.64 | $566,344.79 |
| 35 | Nov 1, 2028 | $12,730.80 | $3,386.83 | $9,343.97 | $583,984.92 | $9,748.82 | $556,595.97 |
| 36 | Dec 1, 2028 | $12,730.80 | $3,332.31 | $9,398.49 | $574,586.43 | $9,803.34 | $546,792.63 |
| 37 | Jan 1, 2029 | $13,112.72 | $3,275.27 | $9,837.45 | $564,748.98 | $9,860.38 | $536,932.25 |
| 38 | Feb 1, 2029 | $13,112.72 | $3,217.87 | $9,894.85 | $554,854.13 | $9,917.78 | $527,014.47 |
| 39 | Mar 1, 2029 | $13,112.72 | $3,160.16 | $9,952.56 | $544,901.57 | $9,975.49 | $517,038.98 |
| 40 | Apr 1, 2029 | $13,112.72 | $3,102.10 | $10,010.62 | $534,890.95 | $10,033.55 | $507,005.43 |
| 41 | May 1, 2029 | $13,112.72 | $3,043.71 | $10,069.01 | $524,821.94 | $10,091.94 | $496,913.49 |
| 42 | Jun 1, 2029 | $13,112.72 | $2,984.97 | $10,127.75 | $514,694.19 | $10,150.68 | $486,762.81 |
| 43 | Jul 1, 2029 | $13,112.72 | $2,925.89 | $10,186.83 | $504,507.36 | $10,209.76 | $476,553.05 |
| 44 | Aug 1, 2029 | $13,112.72 | $2,866.47 | $10,246.25 | $494,261.11 | $10,269.18 | $466,283.87 |
| 45 | Sep 1, 2029 | $13,112.72 | $2,806.70 | $10,306.02 | $483,955.09 | $10,328.95 | $455,954.92 |
| 46 | Oct 1, 2029 | $13,112.72 | $2,746.58 | $10,366.14 | $473,588.95 | $10,389.07 | $445,565.85 |
| 47 | Nov 1, 2029 | $13,112.72 | $2,686.11 | $10,426.61 | $463,162.34 | $10,449.54 | $435,116.31 |
| 48 | Dec 1, 2029 | $13,112.72 | $2,625.29 | $10,487.43 | $452,674.91 | $10,510.36 | $424,605.95 |
| 49 | Jan 1, 2030 | $13,506.11 | $2,561.82 | $10,944.29 | $441,730.62 | $10,573.83 | $414,032.12 |
| 50 | Feb 1, 2030 | $13,506.11 | $2,497.98 | $11,008.13 | $430,722.49 | $10,637.67 | $403,394.45 |
| 51 | Mar 1, 2030 | $13,506.11 | $2,433.76 | $11,072.35 | $419,650.14 | $10,701.89 | $392,692.56 |
| 52 | Apr 1, 2030 | $13,506.11 | $2,369.17 | $11,136.94 | $408,513.20 | $10,766.48 | $381,926.08 |
| 53 | May 1, 2030 | $13,506.11 | $2,304.21 | $11,201.90 | $397,311.30 | $10,831.44 | $371,094.64 |
| 54 | Jun 1, 2030 | $13,506.11 | $2,238.86 | $11,267.25 | $386,044.05 | $10,896.79 | $360,197.85 |
| 55 | Jul 1, 2030 | $13,506.11 | $2,173.14 | $11,332.97 | $374,711.08 | $10,962.51 | $349,235.34 |
| 56 | Aug 1, 2030 | $13,506.11 | $2,107.03 | $11,399.08 | $363,312.00 | $11,028.62 | $338,206.72 |
| 57 | Sep 1, 2030 | $13,506.11 | $2,040.53 | $11,465.58 | $351,846.42 | $11,095.12 | $327,111.60 |
| 58 | Oct 1, 2030 | $13,506.11 | $1,973.66 | $11,532.45 | $340,313.97 | $11,161.99 | $315,949.61 |
| 59 | Nov 1, 2030 | $13,506.11 | $1,906.38 | $11,599.73 | $328,714.24 | $11,229.27 | $304,720.34 |
| 60 | Dec 1, 2030 | $13,506.11 | $1,838.71 | $11,667.40 | $317,046.84 | $11,296.94 | $293,423.40 |
| 61 | Jan 1, 2031 | $13,911.29 | $1,768.29 | $12,143.00 | $304,903.84 | $11,367.36 | $282,056.04 |
| 62 | Feb 1, 2031 | $13,911.29 | $1,697.46 | $12,213.83 | $292,690.01 | $11,438.19 | $270,617.85 |
| 63 | Mar 1, 2031 | $13,911.29 | $1,626.21 | $12,285.08 | $280,404.93 | $11,509.44 | $259,108.41 |
| 64 | Apr 1, 2031 | $13,911.29 | $1,554.54 | $12,356.75 | $268,048.18 | $11,581.11 | $247,527.30 |
| 65 | May 1, 2031 | $13,911.29 | $1,482.47 | $12,428.82 | $255,619.36 | $11,653.18 | $235,874.12 |
| 66 | Jun 1, 2031 | $13,911.29 | $1,409.96 | $12,501.33 | $243,118.03 | $11,725.69 | $224,148.43 |
| 67 | Jul 1, 2031 | $13,911.29 | $1,337.04 | $12,574.25 | $230,543.78 | $11,798.61 | $212,349.82 |
| 68 | Aug 1, 2031 | $13,911.29 | $1,263.69 | $12,647.60 | $217,896.18 | $11,871.96 | $200,477.86 |
| 69 | Sep 1, 2031 | $13,911.29 | $1,189.91 | $12,721.38 | $205,174.80 | $11,945.74 | $188,532.12 |
| 70 | Oct 1, 2031 | $13,911.29 | $1,115.71 | $12,795.58 | $192,379.22 | $12,019.94 | $176,512.18 |
| 71 | Nov 1, 2031 | $13,911.29 | $1,041.06 | $12,870.23 | $179,508.99 | $12,094.59 | $164,417.59 |
| 72 | Dec 1, 2031 | $13,911.29 | $965.98 | $12,945.31 | $166,563.68 | $12,169.67 | $152,247.92 |
| 73 | Jan 1, 2032 | $14,328.63 | $888.04 | $13,440.59 | $153,123.09 | $12,247.61 | $140,000.31 |
| 74 | Feb 1, 2032 | $14,328.63 | $809.64 | $13,518.99 | $139,604.10 | $12,326.01 | $127,674.30 |
| 75 | Mar 1, 2032 | $14,328.63 | $730.77 | $13,597.86 | $126,006.24 | $12,404.88 | $115,269.42 |
| 76 | Apr 1, 2032 | $14,328.63 | $651.45 | $13,677.18 | $112,329.06 | $12,484.20 | $102,785.22 |
| 77 | May 1, 2032 | $14,328.63 | $571.67 | $13,756.96 | $98,572.10 | $12,563.98 | $90,221.24 |
| 78 | Jun 1, 2032 | $14,328.63 | $491.42 | $13,837.21 | $84,734.89 | $12,644.23 | $77,577.01 |
| 79 | Jul 1, 2032 | $14,328.63 | $410.71 | $13,917.92 | $70,816.97 | $12,724.94 | $64,852.07 |
| 80 | Aug 1, 2032 | $14,328.63 | $329.51 | $13,999.12 | $56,817.85 | $12,806.14 | $52,045.93 |
| 81 | Sep 1, 2032 | $14,328.63 | $247.86 | $14,080.77 | $42,737.08 | $12,887.79 | $39,158.14 |
| 82 | Oct 1, 2032 | $14,328.63 | $165.71 | $14,162.92 | $28,574.16 | $12,969.94 | $26,188.20 |
| 83 | Nov 1, 2032 | $14,328.63 | $83.10 | $14,245.53 | $14,328.63 | $13,052.55 | $13,135.65 |
| 84 | Dec 1, 2032 | $14,328.63 | $0.00 | $14,328.63 | $0.00 | $13,135.65 | $0.00 |
Citations & method
- • ASC 842-20-30-1 — initial measurement of the lease liability at the present value of lease payments.
- • ASC 842-20-30-5 — the right-of-use asset comprises the initial liability, prepaid lease payments and initial direct costs, less lease incentives received.
- • ASC 842-20-25-6 — a single lease cost is recognised on a straight-line basis over the lease term for an operating lease.
- • ASC 842-10-25-2 — the five criteria for finance-lease classification.
- • ASC 842-20-50 — quantitative disclosure requirements (weighted-average term/rate, maturity analysis).
- Discount rate applied as a nominal monthly rate: 7.000% ÷ periods-per-year.
- Payments treated as made in advance (annuity-due): each period's payment is applied before interest accretes.
- Operating lease: total lease cost is straight-lined; the ROU asset amortizes as the plug between straight-line cost and interest.
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