A lease maturity table and a balance-sheet liability can describe the same obligation on different measurement bases. Adding them together can double count it. This worksheet keeps future payments, carrying amounts and cash-flow classification separate.
Official references checked: . The figures below are independently constructed fictional cases, not results of the linked companies.
1. Start on the lessee’s side
Establish whether the company rents an asset as lessee or provides it as lessor. This guide concerns payments by a lessee. The IFRS 16 overview introduces right-of-use assets and lease liabilities. US reporting can use different lease classifications and presentation. Open both the borrowings table and lease note, then align their date and units.
2. Reconcile payments to the liability
Our fictional five-period schedule has payments of 24, 22, 20, 18 and 16, totaling 100. A disclosed imputed-interest adjustment of 12 leaves a carrying lease liability of 88. The 100 and 88 represent an undiscounted payment total and a corresponding carrying amount. This reconciliation is not a model estimating the discount rate or timing of individual contracts.
| Step | Amount |
|---|---|
| Undiscounted payments | 100 |
| Imputed interest / discount adjustment | −12 |
| Carrying lease liability | 88 |
| Current portion within that liability | 20 |
| Noncurrent portion within that liability | 68 |
3. Keep the current portion inside the total
The liability of 88 already comprises 20 + 68. If a debt definition combines bank borrowings of 100 with leases, the result is 188, not 100 + 88 + 20. First check whether the stated borrowing total already includes leases. A right-of-use asset is not an equal amount of cash available to offset debt.
4. Record the accounting framework
Under IFRS 16, principal payments on a lessee’s lease liability are financing cash flows. Check the IAS 7 policy applicable to the reporting period for interest, including later amendments or early adoption. Under US GAAP, operating-lease payments and finance-lease principal and interest can appear in different cash-flow categories. Note 13 of Microsoft’s 2025 report provides a real presentation separating operating-lease cash and the operating and financing cash from finance leases. Do not impose one classification on every company.
5. Inspect obligations outside the balance
Record leases not yet commenced, variable payments, renewal or termination options and explanations of short-term or low-value arrangements. Do not automatically add every off-balance amount as immediately payable debt. Separate timing, conditions and overlap. A maturity review locates future cash requirements; comparing the entire schedule with cash on one date does not establish inability to pay.
6. Build a source ledger
| Record | Where to reconcile |
|---|---|
| Lessee role, framework and lease type | Accounting policy and lease note |
| Payment total and discount adjustment | Maturity analysis |
| Current plus noncurrent portions | Balance-sheet presentation |
| Cash paid versus noncash additions | Supplemental lease cash-flow disclosures |
| Uncommenced, variable and optional payments | Additional commitments |
The publicly accessible NZ IFRS 16 text, paragraphs 50 and 58, an IFRS-equivalent standard, provides a reference for classification and maturity disclosures. The particular Korean or US issuer’s framework and policies remain the documents to check.
7. Keep valuation definitions consistent
When entering debt in the enterprise-value calculator, record whether leases are included and use a consistent scope for peers. Mismatched treatment in cash flow or EBITDA makes multiples difficult to compare. The FCF deduction ledger helps check whether a payment already reduced operating cash before subtracting it again.