How to Calculate the Lease Liability | Lessee | IFRS 16

The lease liability is calculated as the present value of the lease
payments. Three things are required to calculate the present value of the lease payments:
1. The amount of each lease payment
2. The lease term
3. The discount rate
Lease payments include:
(a) fixed or variable payments
(b) amounts payable under a residual value guarantee
(c) the bargain purchase price
When it comes to the discount rate, the lessee should use the lessor’s implicit interest rate. If the lessee doesn't know the lessor's implicit interest rate, the lessee should use the lessee's incremental borrowing rate as the discount rate.
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[@lucasamorim5506]

Awesome, been studying accounting and finance on my own coming from an engineering background, sometimes i find it a bit difficult to get up to speed but your videos do help me a lot, best

[@Edspira]

Glad it was helpful!

[@mukeshchoudhary-wn7kj]

Thanks a lot for simplifying complex thing to so simple. You are doing great work by spreading education to large section at free which is your mission. Thanks again.

[@andalonds]

Can I say I love you. Best teacher ever.

[@1rasha]

It would have been great if you could have given episode number for all the videos on the lease for example. It is confusing to understand the order of videos. Thanks

[@Edspira]

TH-cam is sometimes difficult to navigate. I created a website that I think is much easier to navigate through the material. Here's the Intermediate Accounting Index: www.edspira.com/intermediate-accounting-index/. There's a chapter on leases.

[@athrundead1]

Essentially in the PV formula
FV is equivalent to the final lease payment in both cases

[@BandileKhoza-fp7ut]

I want to know the mathematical formula for calculating PV or PMT

[@jimmyteter]

Thank you! Would you be able to do a video for creating the schedule and example of first and last JE's? Your videos are great! It's amazing the lack of examples out there. I guess everyone is pushing their software for this.

[@Edspira]

Stay tuned, I will post several example videos this week!

[@jimmyteter]

@@Edspira Awesome thank you!

[@XAE_A_Xii]

beautifully explained, thank you! you have a new subscriber

[@jerremysilver5656]

You are the best! Thank you!

[@Edspira]

Glad it helped!

[@101E-learnFinanceandmore]

Thank you, this was very clearly explained

[@InGeneralContent]

Could you tell me how to solve this problem if I use a BAII plus financial calculator?

[@skbhat03]

Excellent !! Thank you

[@tarekalsherif57]

Thank you

[@Edspira]

You're welcome!

[@mandysmith9844]

So how would revalue the lease liability after the second payment? Would it just be the carrying value of the lease using the current PVAD or would you use a different PVAD to calculate a new present value for the remaining lease? For example, it was initially a lease of 5 years at 8% with quarterly payments and you were subleasing after year 1. Would the carrying value after the 4th payment be the liability or would it now be a PVAD of n=16 I=2.0%?

[@brencho5962]

what if they dont give an interest rate?

[@WithSeb]

I was going to say, don't you need to reduce n years by 1 from 4 to 3 years for a 2.8286 (3% for 3 years using PV table) for advanced payments, but after doing the math, I still got $34901.65 in the end .. Wtf

[@thandochristinamkize556]

I can't see 😢