Lease Accounting Software for IFRS 16 & FRS 102,
Simplified.

A cloud or IT arrangement only falls under lease accounting if the customer controls a specific, identifiable asset throughout the contract term. Where a supplier retains substantive substitution rights, the arrangement is a service contract — not a lease.

• Key test: Does the customer control the identified asset? If yes → ROU asset required.

The IBR is the rate a lessee would pay to borrow a similar amount over a similar term — and it is the most audited input in any lease accounting file. It must be set individually per lease at commencement, not as a blanket portfolio rate.

• QuantLease IBR Register documents rate, benchmark, methodology, and approving signatory for every lease.

The commencement date — when the asset is made available — is when the accounting clock starts. It is distinct from the contract inception date and is frequently later, especially for pre-let property agreements.

• Common error: Using the contract signing date instead of the asset availability date shifts interest and depreciation to the wrong periods.

Both IFRS 16 and FRS 102 Section 20 allow optional simplifications: leases of 12 months or less (short-term exemption) and assets worth ≤ USD 5,000 when new (low-value exemption) may be expensed straight-line instead of being capitalised.

• Caution: Short-term elections apply per asset class, not per lease — and require an explicit accounting policy note.

You can expense assets qualifying as low-value (laptops, phones, small office equipment) on a straight-line basis regardless of term. Unlike the short-term exemption, you must make this assessment lease-by-lease, not on a class basis.

• Does not apply to sub-leased assets or high-value assets on a low payment schedule.

When a rent review clause links payments to CPI or RPI, each review date triggers a remeasurement — not on every index movement. You discount the revised liability at the current IBR, with the adjustment posted to the ROU asset, not P&L.

• QuantLease tracks review dates, flags remeasurements automatically, and regenerates all affected schedules.

An ROU asset represents a lessee's right to use an underlying asset for the lease term. You initially measure it at the same amount as the lease liability, adjusted for any lease incentives received, initial direct costs, and prepaid or accrued lease payments.

• Depreciation: Straight-line over the shorter of the lease term and the asset's useful life — unless ownership transfers at end of term.

The lease liability is the present value of all future lease payments not yet made, discounted at the IBR (or the implicit rate if determinable). It unwinds each period via the effective interest method — increasing by interest accrual and reducing by cash payments.

• Balance sheet split: Current (due within 12 months) and non-current — both must be disclosed separately.

Under old UK GAAP, leases were classified as finance (on-balance-sheet) or operating (off-balance-sheet). IFRS 16 and the FRS 102 2026 amendments eliminate this distinction for lessees — all qualifying leases are now capitalised.

• Note: The finance/operating distinction is retained for lessors under both IFRS 16 and FRS 102.

A sale and leaseback occurs when an entity sells an asset and simultaneously leases it back from the buyer. Under IFRS 16, if the transfer qualifies as a sale, the seller-lessee recognises only a partial gain or loss — limited to the rights transferred to the buyer.

• Key test: Does the transfer meet IFRS 15 / FRS 102 Section 23 criteria to be accounted for as a sale?

A lease modification is any change to the scope or consideration of a lease not in the original terms. Modifications are either treated as a new separate lease or a remeasurement of the existing liability at a revised IBR.

• Common triggers: Exercising an extension option, rent renegotiation, or adding / removing leased space.

Variable lease payments fall into two categories: those that depend on an index or rate (included in the lease liability) and those that depend on performance or usage (excluded and expensed as incurred).

• Example: Turnover-linked rent is excluded; RPI-linked rent is included and remeasured at each review date.