Lease + income tax formulas

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Last updated 7:51 PM on 9/15/26
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28 Terms

1
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Interest expense
Beginning lease liability × interest rate
2
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Reduction of lease liability
Cash payment − interest
3
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Ending lease liability
Beginning lease liability − reduction of lease liability
4
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Finance lease ROU amortization
ROU asset ÷ lease term, when straight-line amortization applies
5
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Operating lease expense
Total lease payments ÷ lease term, assuming straight-line lease expense
6
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Operating lease ROU amortization
Lease expense − interest on lease liability
7
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Present value of an ordinary annuity
Payment × ordinary annuity PV factor
8
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Present value of an annuity due
Payment × annuity due PV factor
9
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Annuity due PV factor
Ordinary annuity PV factor × (1 + interest rate)
10
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Lease payment when PV and annuity factor are known
Present value ÷ annuity factor
11
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PV of residual value
Future residual value × PV of $1 factor
12
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Total PV when lease includes residual value
PV of lease payments + PV of residual value
13
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Percentage of asset life
Lease term ÷ economic life
14
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Percentage of fair value
PV of lease payments ÷ fair value
15
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Current income tax payable
Taxable income × current tax rate
16
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Deferred tax amount
Temporary difference × enacted future tax rate
17
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Taxable income
Pretax accounting income adjusted for book-tax differences
18
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Temporary difference
Book basis − tax basis
19
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Deferred tax liability
Total taxable temporary differences × enacted future tax rate
20
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Deferred tax asset
Total deductible temporary differences × enacted future tax rate
21
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Income tax expense
Current tax expense + deferred tax expense − deferred tax benefit
22
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Current tax expense
Current income tax payable
23
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Change in DTL
Ending DTL − beginning DTL
24
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Change in DTA
Ending DTA − beginning DTA
25
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Net deferred tax expense
Increase in DTL + decrease in DTA − decrease in DTL − increase in DTA
26
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Effective tax rate
Income tax expense ÷ pretax accounting income
27
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Payments at END of period
Ordinary annuity
28
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Payments at BEGINNING of period
Annuity due