What it is
A lessee that applies ASC 842 records a lease liability at the present value of the remaining payments and a right-of-use asset, then recognizes expense either as a single straight-line cost (operating) or as interest plus amortization (finance). The numbers come from a schedule that is easy to get slightly wrong.
This workbook builds a monthly schedule for one lease of up to 120 months: payments with annual escalation, discounting, interest, the straight-line cost or amortization, liability and asset balances, the current and non-current split at the balance sheet date, the five-year maturity table and a tie-out to the general ledger. Integrity checks confirm both balances run to zero.
When to use it
- Recomputing a client’s lease liability and right-of-use asset on an audit.
- Building a lease schedule at adoption or for a new lease.
- Producing the maturity analysis for the lease note.
What’s inside
- Inputs: term, payment, escalation, timing, discount rate, direct costs, incentives and prepaid rent
- Monthly schedule for liability, interest, expense and ROU asset
- Balances, current portion and maturity table at the balance sheet date
- Checks that the liability and asset end at zero, interest agrees to payments and the maturity table ties
Standard cited
This template follows ASC 842. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Does it handle variable payments or modifications?
No. It models fixed payments with a fixed annual escalation. Index-linked payments, residual guarantees, purchase options, modifications and remeasurements need separate treatment.
Which discount rate should be used?
The rate implicit in the lease when it can be determined readily, otherwise the lessee’s incremental borrowing rate. A private company may elect the risk-free rate by class of asset (ASC 842-20-30-3). The rate is an audit area: ask for support.
Why might the liability differ from the client’s schedule?
Common reasons are a different compounding convention (the client divides an annual rate by 12; this workbook converts an effective annual rate), a different payment timing, a different term or an omitted escalation. Compare inputs first.
Related templates
- Disclosure Checklist: Leases (ASC 842) and Revenue (ASC 606), Short Form
- Audit Program: Debt and Equity
- Fixed Asset Rollforward (Excel)
- Lead Schedule Template (Excel)
Last updated 11/05/2026. All free templates.