IFRS 16 Lease Accounting For Lessors Excel Calculation Model (Excel XLSX)

PURPOSE OF MODEL
User-friendly Excel calculation model to calculate accounting movements and balances for up to 15 lease agreements based on IFRS 16 requirements from a lessor perspective. These include lease received (Net investment in the lease) balances, interest income, revenue, cost of sales, inventory (Equipment held for lease), residual value and months to maturity. The calculation model will automate the lease accounting calculations, journal entries and key disclosures and intended as a supporting working file for the General Ledger lease agreement postings.
The calculation model summarises the balances and movements across all lease agreements for a presentation period of up to 5 years as selected by the user which is available on a monthly and annual basis. The calculation model also includes adjustments for extension and termination options and journal entries.
The model follows good practice financial modelling principles and includes instructions, line item explanations, checks and input validations.

KEY OUTPUTS
The calculation model is generic and not industry-specific. The key outputs include:
•  Lease receivable control account on a monthly and annual basis and by lease agreement. Control account includes opening balance, additions, interest income, lease payments, residual value movements and closing balance.
•  Months to maturity calculation on a monthly and annual basis and by lease agreement as well as overall weighted average.
•  IRR by lease.
•  Charts showing lease receivable by month.
•  Chart showing breakdown of cost and income by lease.
•  Journal entries for selected period including additions, lease payments, interest income and residual value movements.

KEY INPUTS
Inputs are split into setup inputs and cash flow item inputs. All inputs include user-friendly line item explanations and input validations to help users understand what the input is for and populate correctly.
Setup Inputs:
•  Name of business
•  Currency
•  First presentation year
•  Names of lease agreements
•  Non-cancellable starting and ending periods
•  Extension period (if applicable) and probability of exercising extension option
•  Termination period (if applicable) and probability of exercising termination option
•  Purchase or return of leased asset on termination
•  Account codes for journal entries
•  New and previous posting period for journal entries

Cash flow inputs:
•  Cost of leased asset
•  Fair value of leased asset
•  Initial direct costs incurred (if applicable)
•  Fixed lease payments
•  Variable lease payments (if applicable)
•  Other receipts/payments
•  Actual/estimated residual value (if applicable)
•  Guaranteed portion of residual value (if applicable)

MODEL STRUCTURE
The model comprises of 8 tabs split into input ('i_'), calculation ('c_'), output ('o_') and system tabs. The tabs to be populated by the user are the input tabs which include ‘i_Setup' for setup assumptions, ‘i_cashflows' to input applicable lease cash flows. The calculation tabs takes the user-defined inputs to calculate and produce the outputs which are presented in the ‘o_summary', ‘o_journals' and ‘o_Dashboard' tabs.
System tabs include:
•  A 'Front Sheet' containing a disclaimer, instructions and contents;
•  A checks dashboard containing a summary of checks by tab.

KEY FEATURES
Other key features of this tool include the following:
•  The model follows good practice financial modelling guidelines and includes instructions, line item explanations, checks and input validations.
•  The model allows for a maximum of 15 lease agreements (this can be extended if required).
•  The model allows the inclusion of extension and termination options with drop down to select probability option will be exercised.
•  The model includes 8 different cash flow types for each lease agreement including: cost of leased asset, fair value of leased asset, initial direct costs, fixed & variable & other payments, residual values.
•  The model allows for lease agreements with any starting and ending date to be included (up to 10 years) and summarises lease balance and movement results across a 5 year period as selected by the user.
•  Business name, currency, first presentation year and lease assumptions are fully customisable.
•  The model includes a checks dashboard which summarises all the checks included in the various tabs making it easier to identify any errors.