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.