ASC 842 Lease Accounting Calculator

Comprehensive lease analysis with classification, amortization, and journal entries

Disclaimer: This tool is provided AS IS without warranty. The creator assumes no liability for any damages or losses from its use. Users accept full responsibility for all outcomes. Not a substitute for professional accounting advice.

Lease Information

Basic Lease Terms
Discount Rate
Enter as decimal (5% = 0.05)
Classification Test Inputs
Required for present value test
Required for lease term test
Initial Recognition Adjustments (Optional)
Reporting Settings
Format: MM/DD

ASC 842 Technical Guidance

Lease Classification Tests

A lease is classified as a finance lease if it meets ANY of the following criteria:

  1. Transfer of Ownership: The lease transfers ownership of the asset to the lessee by the end of the lease term.
  2. Purchase Option: The lease grants the lessee an option to purchase the asset that the lessee is reasonably certain to exercise.
  3. Lease Term: The lease term is for the major part of the remaining economic life of the asset (generally ≥ 75%).
  4. Present Value: The present value of lease payments equals or exceeds substantially all of the fair value of the asset (generally ≥ 90%).
  5. Specialized Nature: The asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

Initial Recognition

Lease Liability: Present value of lease payments not yet paid

ROU Asset: Lease liability + Prepaid rent + Initial direct costs - Lease incentives received

Subsequent Measurement

Operating Leases:

  • Single lease cost recognized on straight-line basis
  • Lease liability reduced by payments less interest
  • ROU asset amortization is a plug to achieve straight-line expense

Finance Leases:

  • Interest expense on lease liability
  • Amortization expense on ROU asset (typically straight-line)
  • Total expense front-loaded due to interest

Practical Expedients

Risk-Free Rate: Private companies may elect to use the risk-free rate (e.g., US Treasury rate) as the discount rate.

Short-Term Leases: Leases with terms of 12 months or less may be excluded from balance sheet recognition.

Treasury Rates (Risk-Free Rate)

⚠️ Important Notice: The rates shown below are static approximations and NOT live data. For actual lease accounting, you must obtain current rates from official sources.

How to Get Current Treasury Rates:

  1. Primary Source: Visit U.S. Treasury Daily Yield Curve Rates
  2. What to Look For: Match your lease term to the appropriate treasury maturity:
    • Lease term ≤ 1 year → Use 1-year Treasury
    • Lease term 1-2 years → Use 2-year Treasury
    • Lease term 2-3 years → Use 3-year Treasury
    • Lease term 3-5 years → Use 5-year Treasury
    • Lease term 5-7 years → Use 7-year Treasury
    • Lease term 7-10 years → Use 10-year Treasury
    • Lease term > 10 years → Use 20 or 30-year Treasury
  3. When to Use: The rate should be as of your lease commencement date
  4. Documentation: Save a screenshot or PDF of the rates for your audit documentation

Static Rates in This Tool (Approximate as of 2024/2025):

Pro Tip: For historical rates (if your lease commenced in the past), use the Treasury's historical data by adjusting the month/year in the URL above, or search for "Daily Treasury Yield Curve Rates" for your specific date.