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Finance Lease Amortization Schedule CalculatorLiability, Interest and ROU Amortization

What is this money worth, or what does it cost, over time?

Lease liability, interest, principal, straight-line right-of-use amortization and total lease expense for any year of a finance lease.

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  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Total lease expense for the year
$54,761
Interest on the liability plus right-of-use amortization
Initial lease liability
$210,618
Interest expense
$12,637
Drawn to one scale
Total lease expense for the year$54,761
Initial lease liability$210,618
Interest expense$12,637
Principal reduction$37,363
Right-of-use amortization (straight-line)$42,124
Lease liability at year end$173,255
All results
MeasureResult
Total lease expense for the year$54,761
Initial lease liability$210,618
Interest expense$12,637
Principal reduction$37,363
Right-of-use amortization (straight-line)$42,124
Lease liability at year end$173,255
How this was worked out
Work shownrecomputed as you type
Liability = present value of lease payments at the discount rate
Interest in year t = opening liability (after any advance payment) x rate
Right-of-use amortization = (liability + initial direct costs) / lease term
Expense = interest + amortization

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Liability = present value of lease payments at the discount rate
  • Interest in year t = opening liability (after any advance payment) x rate
  • Right-of-use amortization = (liability + initial direct costs) / lease term
  • Expense = interest + amortization

How it works

A finance lessee recognizes a lease liability at the present value of the payments and a right-of-use asset of the same amount plus initial direct costs. Interest accrues on the liability, and the asset is amortized straight-line over the shorter of the lease term and the useful life.

The total expense is front-loaded because interest is highest at the start. This tool assumes the asset is amortized over the lease term, with no purchase option reasonably certain to be exercised, and no residual guarantees. Cash payments are annual.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Which discount rate?

The rate implicit in the lease if readily determinable, otherwise the incremental borrowing rate.

How is this different from an operating lease?

An operating lease shows a single straight-line cost. A finance lease shows interest and amortization separately.

What about a purchase option?

If exercise is reasonably certain, amortize over the asset useful life and include the option price in payments.

Formulas on this page are the standard definitions.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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