Incremental borrowing rate
In accounting, incremental borrowing rate means the rate the lessee would pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments — the discount rate when the implicit rate is unknown.
- Layer
- Lexicon
- Defined in
- Lexicon
- Also called
- IBR
- Nearby
- 4
Authority
This definition follows ASC 842-20-20 — glossary.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Incremental borrowing rate, in use
Quoted from the document that use the word — what it does to an interface, in the spec's own sentence.
The discount rate is displayed and its source stated — implicit rate if determinable, otherwise incremental borrowing rate; an entity that is not a public business entity may elect a risk-free rate by class of asset (ASU 2021-09).
Schedules, accruals & roll-forwards — 7. Leases (ASC 842 / IFRS 16)
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- cost of capital
- WACC
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
Terms this one depends on
Also in Fixed assets & leases
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Journal entry for an operating lease under ASC 842For an operating lease, at commencement debit Right-of-use asset and credit Lease liability for the present value of the payments. Each payment debits Lease liability and credits Cash; each month-end debits Operating lease cost for the straight-line cost and credits Lease liability for the interest and the right-of-use asset for the rest.Entry
- Journal entry for a finance lease under ASC 842For a finance lease, at commencement debit Right-of-use asset and credit Lease liability for the present value of the payments. Each payment debits Lease liability and credits Cash; each month-end debits Interest expense and credits Lease liability for the interest, and debits Amortization expense and credits the right-of-use asset for straight-line amortization.Entry
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.