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How the Cash Flow Statement's Interest Portion Paid for a Finance Lease and a lease under IFRS 16 is calculated
How the Cash Flow Statement's Interest Portion Paid for a Finance Lease and a lease under IFRS 16 is calculated

This article shows how the interest portion paid and the principal payments paid are calculated in Cradle

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Written by Support
Updated over a week ago

It should be noted that this calculation methodology is only applicable for finance leases under ASC 842 or any lease for IFRS 16.

Calculation Methodology

Cradle calculates the interest portion paid by calculating the interest on each upcoming outgoing payment. In otherwords the interest directly incurred on that payment.

Practical Example

The company has the following payment details:

  • Pays $10,000 in advance each month on the first of each month

For the $10,000 payment on March 1, the interest portion paid will be calculated from February 2 to March 1.

Refer to here for an actual calculation example.

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