The calculation of the current/non-current lease liability split is very straightforward. First, it builds on the calculation principles noted in the article -How Cradle's NPV Calculation for Lease Liability and Right of Use Asset Works. For example, you will use the XNPV formula in Excel.
The simplest method to recalculate the current/non-current lease liability is to do the following:
To get the current portion, present value the future lease payments of the lease liability of the next 12 months.
To get the non-current portion of the lease liability, subtract the current lease liability from the total lease liability balance. This results in the non-current portion of the lease liability.
A Calculation Example
If you're looking for a more in-depth guide to calculating the current/non-current split refer here,
The example calculates both the current and non-current lease liability and ties these figures to the journal and disclosure reports.
Alternative Calculation Methodology
To calculate the current/non-current some Big 4 firms have suggested to sum the total payments for current period (12 months) less interest incurred.
That method quickly becomes non scensical when you have a lease with significant payments after the current period.
An Example
Lease Start Date: 2023-01-01
Accounting End Date: 2034-12-31
Discount Rate: 7%
Fixed Payments: $5,000
Fixed Increase 2025-01-01: $8,000
With this scenario, it results in a negative current liability amount:
Payments: $60,000
Interest: $75,109.63
Current Lease Liability: -15,109.63