Learn how to calculate the present value of lease payments in India using discounting methods under Ind AS 116. The Present Value (PV) of lease payments is the current worth of future lease payments, discounted at an appropriate rate. This calculation is essential under Ind AS 116 (Leases) for financial reporting in India.
PV=∑LP/(1+r)n
Where:
LP = Lease Payment per period
r = Discount rate (Incremental Borrowing Rate or Interest Rate Implicit in Lease)
n = Number of periods
Apply the formula to discount each lease payment to its present value and the total of discounted payments is the present value of lease payments.
Assume:
Rs. 1,00,000 annual lease payment
5-year lease term
Discount rate, n = 8%
Using the formula, discount each payment and sum the values to get the present value.
I hope this helps you in obtaining the present value of lease payments.
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How Do You Calculate Present Value Of Lease Payments?
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2025-03-27T16:39:12+00:00 2025-03-29T22:08:00+00:00Comment
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