Menu Close

IFRS 16 & ASC 842 SOLUTION

Introducing an automated solution to calculate a lease-specific incremental borrowing rate

Read more

Incremental borrowing rate for Lease accounting

Are you prepared to get your leases on balance?

The FASB and IASB have issued new guidance for leases under ASC 842 and IFRS 16, respectively. The new standards require public business entities to put their leases on balance, impacting their key financial ratios.

Transfer pricing documentation

85%

of leases are classified as operational leases by lessees

Transfer pricing technology

0.4%

increase in EBIT is expected on average due to IFRS 16.

Our building block approach

Five building blocks determine the incremental borrowing rate.

IASB IFRS 16

"The rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment."

FASB ASC 842

"The rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

The lessee, reflected in a company-specific credit rating
The quality of the underlying collateral
The term of the lease arrangement
The notional amount of the lease or effective funds borrowed
The economic environment, including the jurisdiction and currency of the lease

The lessee, reflected in a company-specific credit rating

The notional amount of the lease or effective funds borrowed

The quality of the underlying collateral

The term of the lease arrangement

The economic environment, including the jurisdiction and currency of the lease

Our best-practice methodology

Four easy steps to determining an incremental borrowing rate for each lease in your portfolio.

Upload the financials

Upload the lease portfolio and the financial statements of the lessees.

Credit rating assessment

The solution determines the credit rating of the lessee.

Pricing assessment

The solution determines the appropriate incremental borrowing rate for each lease.

Incremental borrowing rate report

The solution delivers a report that contains the pricing grid as well the underlying methodology.

Step 1

Upload the financials

Upload the lease portfolio and the financial statements of the lessees.

Step 1

Credit rating assessment

The solution determines the credit rating of the lessee.

Step 1

Pricing assessment

The solution determines the appropriate incremental borrowing rate for each lease.

Step 1

Incremental borrowing rate report

The solution delivers a report that contains the pricing grid as well the underlying methodology.