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When calculating interest expense for a finance lease, the outstanding obligation is equal to the previous period's ending lease liability balance. Then the appropriate annual interest rate is multiplied by the fraction of one year for which the interest expense is being calculated.

How to calculate the present value of a payment stream using Excel in 5 steps Step 1: Create your table with headers.Step 2: Enter amounts in the Period and Cash columns.Step 3: Insert the PV function.Step 4: Enter the Rate, Nper Pmt and Fv.Step 5: Sum the Present Value column.

To calculate the imputed interest on the operating lease, multiply the debt value of the lease by the cost of debt. We can use this imputed interest value to adjust the interest expense. We do this by adding the imputed interest to interest expense.

Divide the depreciation amount by the number of months in your lease. This will be your base payment. Add the adjusted capitalized cost and the residual value. Take the sum and multiply it by money factor.

How to create the lease amortization schedule and calculate your lease liability Step 1: Create an Excel spreadsheet with these five columns.Step 2: Enter the number of periods and cash payments.Step 3: Enter the expense formula.Step 4: Fill the expense column.Step 5: Enter the formula for liability reduction.

Lease liability recording it Once we have gathered our information, i.e., we know the lease term, the lease payment and the discount rate, we simply discount the liability over the lease term, using the discount rate. We then record the lease liability, or the resulting amount, on the balance sheet.

The right of use asset will be recorded as the lease liability plus initial direct costs plus prepayments less any lease incentives. Therefore, the right-of-use asset would be calculated as $179,437 (lease liability) +1,000 (lease incentives) = $180,437 (Note there are no prepayments or lease incentives in this example