# Classify a lease and calculate the opening lease entries

Works through lease classification, the lease liability and right-of-use asset, and the first entries, with every assumption made visible.

- Topic: Finance & Accounting
- Framework: RTF
- Level: Standard
- Tags: Finance, Plan, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/classify-a-lease-and-calculate-the-opening-lease-entries

## Prompt

```text
Help me account for a lease.

**Framework:** [ASC 842 / IFRS 16]
**Lease terms:** [PASTE - asset, commencement date, term, renewal/termination options, payment schedule and escalations, free-rent periods, purchase option, residual value guarantees]
**Initial direct costs and lease incentives:** [AMOUNTS]
**Discount rate:** [rate implicit in the lease if known, or our incremental borrowing rate, or the risk-free rate election if we're eligible]
**Our policy elections:** [short-term lease exemption, combine lease and non-lease components, etc.]

Steps:
1. Confirm it contains a lease (identified asset, right to control).
2. Determine the lease term, including options we're reasonably certain to exercise - explain the judgment.
3. Classify it (finance vs. operating under ASC 842; IFRS 16 lessees use a single model) and show each test.
4. Calculate the initial lease liability (present value of payments) and right-of-use asset.
5. Build the amortization schedule for the first 12 months.

Return:
1. Classification conclusion with the reasoning.
2. A calculation table I can rebuild in a spreadsheet (period, payment, interest, principal, liability balance, ROU asset balance).
3. Opening journal entry and the first monthly entry.
4. A list of inputs marked [CONFIRM] - especially the discount rate and term.

Show the math, don't just state results. Verify final numbers in a spreadsheet and with our auditors before booking.
```

## What to fill in

- ASC 842 / IFRS 16
- AMOUNTS
- CONFIRM

Free to copy and use. From ThinkWithPrompt (https://www.thinkwithprompt.com/), a library of 2,663 curated AI prompts.