Lease Liability

Definition: Lease Liability is the present value of a lessee's remaining lease payments, recognized on the balance sheet under ASC 842 and IFRS 16 for both fin…

Lease Liability is the present value of a lessee's remaining lease payments, recognized on the balance sheet under ASC 842 and IFRS 16 for both finance and operating leases. At commencement, Lease Liability = PV of Remaining Lease Payments discounted at the rate implicit in the lease (or, if not determinable, the lessee's incremental borrowing rate). Subsequent measurement uses the effective interest method: each period the liability is increased by interest expense and decreased by lease payments. The corresponding debit at commencement is the Right-of-Use Asset.