Free Excel Template
Lease Amortization
Schedule Excel
Template
Build an accurate, ASC 842 compliant lease payment schedule in Excel. Track lease liabilities, interest, principal, and ROU asset amortization in one workbook, no matter what ERP or accounting system you rely on.
Break every lease payment into interest, principal, and remaining liability
Calculate ROU asset amortization with an ASC 842 compliant structure
Cut manual errors and walk into your audit with confidence
Get your free template
Complete the form and you'll be redirected to the resource
What's inside the template
Netgain was founded by accountants who built tools for accountants. We know exactly what your day looks like, and we designed accounting software to make it better.
Accuracy from the start
Simple to use
ASC 842 compliant
Audit ready
What is a lease amortization schedule?
A lease amortization schedule, sometimes called a lease payment schedule, is a financial tool
used to outline the repayment plan of a lease agreement over its duration. It provides a detailed
breakdown of lease payments, interest expenses, and principal reductions, so you can assess the
impact of leases on the balance sheet and income statement.
1
Lease payment
The contractual payment from
lessee to lessor over the term,
comprising principal and interest.
2
Interest expense
The portion of each payment
attributable to interest on the
lease liability, using the effective
interest method.
3
Principal reduction
The portion of each payment that
reduces the lease liability and
repays the obligation over time.
4
Remaining liability
The outstanding balance yet to be
repaid, decreasing with each
payment until the term ends.
Creating an ASC 842 compliant amortization
schedule: step-by-step guide
The transition to ASC 842 requires a meticulous approach to lease accounting, particularly the
amortization of lease liabilities. Here is a step-by-step guide to creating an ASC 842 compliant
amortization schedule.
Begin by inventorying all lease agreements to determine which contracts qualify under ASC 842. Classify each lease as either a finance lease or an operating lease based on criteria such as transfer of ownership, purchase options, lease term, and the present value of lease payments.
Include the non-cancellable period of the lease in your calculations. Consider any options to extend or terminate the lease and include them if it is reasonably certain they will be exercised.
Calculate the present value of future lease payments using the appropriate discount rate, which is either the rate implicit in the lease or the lessee's incremental borrowing rate. Ensure that variable lease payments that depend on an index or a rate are initially measured using the index or rate as of the commencement date.
Start with the initial measurement of the lease liability, then add any lease prepayments and initial direct costs incurred. Subtract any lease incentives received from the lessor to arrive at the initial value of the right-of-use (ROU) asset.
For finance leases, separate the interest and amortization of the ROU asset in the schedule, reflecting a front-loaded expense pattern. For operating leases, combine these amounts to reflect a straight-line expense pattern over the lease term.
Record the diminishing balance of the lease liability and the corresponding interest expense for finance leases. Adjust the ROU asset for amortization and present the single lease cost for operating leases, reflecting the straight-line expense pattern.
Regularly review the lease terms for modifications that may affect the lease classification, lease term, or the discount rate. Adjust the amortization schedule to reflect any remeasurements or modifications to the lease agreement.
Provide a clear and comprehensive disclosure of your lease obligations, including the nature of the leases, significant terms and conditions, and information about lease liabilities and ROU assets. Include information about the timing and amount of lease payments, along with the specific line items in the financial statements affected by lease accounting.
Best practices for maintaining an ASC 842 amortization schedule
A few habits keep your schedules accurate, auditable, and ready for whatever the standard, or
your auditor, asks for next.
Review and update lease terms
Monitor extensions, terminations, and modifications, and reassess renewal or purchase options that move the liability and ROU asset.
Keep data entry accurate
Use a double-entry check to minimize errors, and update the schedule promptly so the figures stay accurate and relevant.
Stay audit-ready
Maintain a clear audit trail and keep schedules in an audit-ready state that supports the
disclosures ASC 842 requires.
Final thoughts on lease amortization schedules
A lease amortization schedule gives you a clean breakdown of payments, interest, and
principal, and keeps you aligned with ASC 842. The catch is that a spreadsheet only stays
accurate until the next modification, renewal, or new lease lands on your desk. That is the
point where most teams move off Excel.
Accounting teams on NetSuite
NetLease
Automated ASC 842 compliance lease accounting without ever leaving NetSuite. Leverage features like amortization schedules and AP reconciliations for streamlined workflows.
NetLease for NetSuite →NetAsset
Manage and track the depreciation of your fixed assets seamlessly within NetSuite.
NetAsset for NetSuite →Accounting teams not on NetSuite
NetLease
Your lease accounting software solution that streamlines the complexities of lease accounting in one centralized platform. Simplify compliance, reclaim time, and ensure accuracy.
NetAsset
Netgain’s fixed asset management software, NetAsset, empowers accountants to streamline the tedious tasks involved in accounting for your fixed asset portfolios.