IVC IFRS 16 – Incremental borrowing rate tool

According to IFRS 16, the lessee must measure the lease liability at the date of provision at the present value of the lease payments not yet made at that date. The lease payments are discounted at the interest rate underlying the lease if this can be readily determined. If this rate cannot be readily determined, the lessee’s incremental borrowing rate is used (see IFRS 16.26).

The lessee’s incremental borrowing rate is the interest rate that a lessee would be required to pay if, for a similar period of time and with comparable certainty, it borrowed the funds that it would need in a similar economic environment to acquire an asset with a value comparable to the right to use it (see IFRS 16, Appendix A).

The analyses presented above show possible marginal interest rates for companies with a BBB rating. Interest rate data in the respective local currency was analyzed to determine the interest rates. In order to take the term of a lease into account, the interest rates were clustered into three maturity bands (maturities: 1-3 years, 4-5 years, 6-10 years). A distinction is also made according to whether the lease relates to a movable asset (mobile lease) or a property (property lease). If the current low interest rates result in negative interest rates, a lower limit of 0% is applied. The data is updated at the end of each quarter.

Disclaimer (non-binding translation, see German site for binding version): The IVC Incremental borrowing rate tool is a free service provided by IVC Independent Valuation & Consulting Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, which can be used without concluding a contract. The results must be checked and we do not accept any liability for incorrect calculations. The IVC Incremental borrowing rate tool does not replace a corresponding expert opinion for the determination of (marginal) borrowing rates.