Everything you need to account for a lease
Plain-English, citation-backed references for ASC 842, IFRS 16 and GASB 87 — the standards, the terminology, the fact patterns by asset class, and exactly how Ledgerage turns a lease into a schedule, journal entries and disclosures.
The three standards
How each standard measures and classifies a lease, cited to the codification.
ASC 842 is the US GAAP leasing standard. It requires a lessee to recognise a right-of-use (ROU) asset and a lease liability on the…
Read the guide →IFRS 16 is the international leasing standard. Unlike US GAAP it uses a single lessee accounting model: almost every lease is reco…
Read the guide →GASB 87 is the leasing standard for US state and local governments. Like IFRS 16 it uses a single model: a lessee recognises a lea…
Read the guide →Key terms, defined
The vocabulary of lease accounting — each term cited and cross-linked.
Discount rate
The discount rate is the rate used to present-value the lease payments — the rate implicit in the lease if determinable,…
Read definition →Incremental borrowing rate (IBR)
The incremental borrowing rate is the rate a lessee would pay to borrow, over a similar term and with similar security, …
Read definition →Initial direct costs
Initial direct costs are incremental costs of obtaining a lease that would not have been incurred if the lease had not b…
Read definition →Lease incentive
A lease incentive is a payment made by the lessor to or on behalf of the lessee, such as a tenant improvement allowance …
Read definition →Lease liability
The lease liability is the present value of the remaining lease payments, discounted at the rate implicit in the lease o…
Read definition →Lease modification
A lease modification is a change to the scope or consideration of a lease that was not part of the original terms, requi…
Read definition →Accounting by what you lease
The typical fact pattern for each asset class — with a live worked example.
Office & real estate
Office and commercial property leases are the most common ASC 842 leases — typically long-term, paid monthly i…
Accounting for a office lease →Vehicles & fleet
Company cars and fleet vehicles are typically 3–5 year leases paid monthly. Depending on the term versus the v…
Accounting for a vehicle lease →Equipment & machinery
Manufacturing and construction equipment leases are often finance leases because the term covers most of the m…
Accounting for a equipment lease →IT & data-center hardware
Servers, laptops and data-center hardware are usually short-to-mid-term leases. Many qualify for the short-ter…
Accounting for a IT equipment lease →Retail space
Retail leases combine long terms, base rent with escalations, and frequently tenant improvement allowances (le…
Accounting for a retail lease →Warehouse & industrial
Warehouse and industrial property leases behave like other real estate: long-term operating leases, monthly in…
Accounting for a warehouse lease →How Ledgerage computes a lease
See the four steps — enter the lease, compute the present value, ROU asset and liability, review the schedule, journal entries and disclosures, then export or call the API. Deterministic, and cited on every result.
- 01Enter the lease — standard, term, payment, timing and rate.
- 02The engine computes present value, ROU asset and lease liability.
- 03Review the amortization schedule, journal entries and disclosures.
- 04Export audit-ready workpapers or call the same engine via the API.