This Python-based tool helps accountants generate not only a lease liability schedule under IFRS 16 but also a Right of Use (RoU) asset schedule quickly and consistently. By running the code and providing a few key inputs—such as:
- the periodic lease payment amount,
- payment frequency (annual, quarterly, monthly, etc.),
- payment timing (upfront or in arrears),
- total number of payments,
- incremental borrowing rate, and
- additional RoU asset parameters (initial direct costs, prepaid lease payments, lease incentives, useful life, and expected residual value),
the program calculates both the inital value of the lease liability and the initial RoU asset value, then produces two detailed schedules:
- Lease Liability Schedule:
This includes columns for the period number, lease liability opening balance, interest expense, repayment, “Other” (for manual adjustments), and closing balance. It ensures you have a period-by-period breakdown that ties directly back to the calculated discount rate which can be used for accounting entries. - Right of Use Asset Schedule:
Leveraging the initial lease liability calculation and the user-provided adjustments (initial direct costs, prepaid lease payments, lease incentives), this schedule starts from the RoU asset’s initial balance and applies straight-line depreciation over the asset’s useful life, taking into account any asset’s residual value. It shows the opening balance, depreciation expense (negative amounts to reflect expense), “Other” (for manual input), and the RoU asset closing balance. This schedule can be then used for accounting entries on asset’s side.
Output and File Structure:
The results are output to an Excel file saved on the user’s desktop. Inside the workbook, you’ll find:
- A “Lease Schedule” tab with user inputs documented, followed by the detailed lease liability amortization table.
- A “Right of Use Asset Schedule” tab, similarly documenting key inputs and showing the RoU asset’s amortization over its useful life.
Limitations & Considerations:
While this tool handles a straightforward lease scenario quite efficiently, it’s not designed to cover every complexity under IFRS 16. For leases with variable lease payments, index-linked rents, or complex termination and extension options, manual adjustments or additional customization will be necessary.
Benefits & Customization:
For many standard leases, this tool can significantly reduce the time compared to building schedules entirely in Excel. With some basic Python knowledge, you can further tailor the code, adding functionalities or refining the layout to meet specific reporting needs.
Code Download:
This tool serves as a solid starting point for streamlining IFRS 16 compliance, ensuring quick calculation output that allows for accounting for non-complex leases.