How is the “Amount Financed” calculated for right-of-use leases in AssetAccountant?
AssetAccountant software uses a net present value method (XIRR) for working out the Amount Capitalised for right-of-use leases.
It is possible there might be some small differences between what you work out independently and what AssetAccountant calculates and reports.
When generating the schedule, you can hover over the (?) icon next to the "Calculated interest rate" output in the interface that is shown for the calculations, which will reveal the basis upon how AssetAccountant makes such calculations.
For example if you entered a supplied interest rate of 5% into the AssetAccountant interface for this:
"Finance providers use a range of methods and compounding periods to attribute interest across lease payments. AssetAccountant uses a number of these methods and, where none of these is an exact match, uses the best fit to to the details provided by your input.
In this case, using your supplied interest rate of 5%, the best match AssetAccountant could find to the payment schedule provided results in a difference of $0.00 across all payments (on an actual month / 365 day year / compounding daily basis). This difference has been spread across all interest payments to match the payment schedule provided.
AssetAccountant has calculated an interest rate using XIRR (yearly compounding, standard rounding and actual month / 365 day year calculation) at 5.1267% and using daily compounding as 5%. Note that these are approximate figures and may not agree exactly with your lessor's calculated interest rate, due to the variety of methods applied by lessors."
Please note the potential difference between entering an interest rate based on yearly vs daily compounding interest. This can sometimes be the culprit to a difference in what you calculate yourself and AssetAccountant's calculations.
