ShareControl IFRS 16 feature
Journal entries and lease accounting in ShareControl IFRS 16
IFRS 16 is not only about calculating the lease liability and the right-of-use asset. The figures must be accrued, posted, reconciled and reported every month. ShareControl IFRS 16 makes it easier to generate accounting journals, amortisation schedules and postings from the same data.
Journal entries
Which IFRS 16 postings are covered?
ShareControl IFRS 16 can provide the basis for the main postings throughout the life of the lease, from initial recognition to monthly accruals and later changes.
| Area | Example |
|---|---|
| Initial recognition | The lease liability and right-of-use asset are recognised |
| Monthly interest | Interest expense is calculated and accrued |
| Depreciation | The right-of-use asset is depreciated over the lease term, or its useful life if shorter |
| Payments | Each payment is split between interest and reduction of the lease liability |
| Modifications and reassessments | Changes to the lease give new calculations and change postings |
| Termination | The lease ends and the accounting effect is calculated |
How it works
How journal entries and lease accounting work in ShareControl IFRS 16
ShareControl IFRS 16 keeps lease data, calculations, amortisation schedules and postings in the same solution. This makes it easier to use the same figures for accounting, reporting, reconciliation and audit.
1
Register the lease with payments, term, rate and accounting information.
2
The system calculates the lease liability, right-of-use asset and amortisation schedule.
3
Interest, depreciation and payment allocation are accrued automatically.
4
An accounting journal is generated, or postings are delivered to the ERP system through an integration.
Lease data
Register the lease once
Lease accounting starts with the lease data. Once the lease is registered in ShareControl IFRS 16, the same data is used for the automatic calculations, amortisation schedule, journal entries and reporting.
Lease term and payment schedule
Discount rate
Company and currency
Accounts and dimensions
Documentation and lease attachments
Amortisation
Automatic amortisation schedule
ShareControl IFRS 16 calculates the amortisation schedule from the payment schedule, discount rate and lease term. The schedule is the basis for accruing interest, payments and the remaining liability.
Opening lease liability
Monthly interest calculation
Allocation of payments
Reduction of the lease liability
Remaining liability per period
Accruals
Monthly depreciation, interest and lease payments
After initial recognition, each lease must be accounted for on an ongoing basis. ShareControl handles the monthly accruals of the main IFRS 16 effects.
| Accruals | What ShareControl IFRS 16 calculates | Accounting effect |
|---|---|---|
| Depreciation | Straight-line depreciation of the right-of-use asset | Depreciation expense recognised per period |
| Interest | Interest on the lease liability | Interest expense recognised in profit or loss |
| Payment | Allocation of each payment between interest and repayment, based on the amortisation schedule | Reduction of the lease liability in the balance sheet |
| Remaining liability | Lease liability outstanding after payment | Current and non-current liability in the balance sheet |
Accounting journal
Generate IFRS 16 entries as an accounting journal
ShareControl IFRS 16 delivers postings as an accounting journal as standard. This gives the finance team a controlled basis for the accounts, without a direct ERP integration having to be in place from day one.
Opening entries
Monthly interest entries
Depreciation of the right-of-use asset
Payment allocation
Change postings for modifications
Journal basis per company and period
Reconciliation
Reconcile with the general ledger each period
The IFRS 16 figures must reconcile with the general ledger. ShareControl IFRS 16 gives a structured basis for checking that the lease liability, right-of-use asset, interest and depreciation agree with the accounts.
Reconciliation per period
Reconciliation per company
Link between lease, calculation and accounting journal
Check of balance sheet and income statement items
Documentation for the audit
Simpler lease accounting under IFRS 16
See how ShareControl IFRS 16 makes it easier to calculate, accrue, post and reconcile leases under IFRS 16.
