ASC 842 puts leases on the balance sheet - compare both options with full balance sheet impact.
ASC 842 Analysis
Lease vs buy comparison with ASC 842 balance sheet impact included.
Compare the net present value of leasing versus buying an asset, including ASC 842 balance sheet impact, tax shields, residual value, and maintenance costs.
Direct answerA lease vs buy NPV comparison calculates the after-tax net present value of both options - leasing (with ASC 842 liability recognition) and buying (with depreciation tax shields and residual value) - to determine which is more cost-effective.
NPV comparisonASC 842 impactTax shield modeling
1. Build the scenario
CalculatorEnter asset cost, lease payment, financial assumptions, and optional residual value and maintenance costs. Or load the sample scenario.
Enter assumptions or load a sample scenario to see the results.
Live Tool
Lease vs Buy NPV Comparison in the browser
Enter the asset cost, lease terms, and financial assumptions to compare the NPV of leasing versus buying with ASC 842 balance sheet impact.
Privacy-first workflow
This page runs in the browser. No financial data is sent to any server.
What this lease vs buy comparison solves
ASC 842 puts operating leases on the balance sheet, eliminating the off-balance-sheet advantage. This tool compares both options on an NPV basis.
Include depreciation tax shields for buying and lease payment deductions for leasing.
Factor in the expected residual value of the asset if purchased.
Key signals
Lease NPV, buy NPV, NPV advantage, and balance sheet impact comparison.
Decision support
Cost comparison, tax impact analysis, and ASC 842 balance sheet considerations.
Detailed breakdown
Year-by-year cash flow comparison for both lease and buy scenarios with present values.
Calculates the net present value of after-tax cash flows for both leasing and buying, making the cost difference immediately visible.
Shows the lease liability and ROU asset that would be recognized under ASC 842, eliminating the off-balance-sheet illusion.
Includes depreciation tax shields for buying and lease payment tax deductions for leasing in the after-tax NPV calculation.
Factors in the expected residual value of the purchased asset and annual maintenance costs borne by the buyer.
Guide Below The Tool
How to use the lease vs buy NPV comparison well
Key concepts, practical steps, and guidance for evaluating asset acquisition strategies under ASC 842.
A lease vs buy NPV comparison calculates the after-tax net present value of both options - leasing (with ASC 842 liability recognition) and buying (with depreciation tax shields and residual value) - to determine which is more cost-effective.
CFOs, controllers, procurement managers, and finance teams evaluating asset acquisition strategies.
Asset cost, monthly lease payment, lease term, discount rate, tax rate, residual value, depreciation period, and maintenance costs determine which option has a lower NPV.
Workflow
Four practical steps
Use this comparison to make data-driven asset acquisition decisions with full ASC 842 balance sheet impact.
1
Enter asset cost and lease terms.Start with the purchase price of the asset and the monthly lease payment and term from the lease proposal.
2
Set discount rate and tax rate.Enter the discount rate for present value calculations and the corporate tax rate for tax shield modeling.
3
Add residual value and maintenance costs.Enter the expected residual value of the asset at the end of the analysis period and any annual maintenance costs borne by the buyer.
4
Review the NPV comparison.Compare the after-tax NPV of leasing versus buying, including ASC 842 balance sheet impact and tax shields.
Review Checklist
What reviewers usually validate first
Key details that affect lease vs buy decisions and NPV calculations.
Confirm the purchase price includes all acquisition costs: purchase price, delivery, installation, and any required modifications.
Verify the monthly lease payment matches the lease proposal and includes any common area maintenance or insurance pass-throughs.
Use a discount rate that reflects the company's cost of capital or the incremental borrowing rate for comparability.
Use the marginal tax rate for deduction calculations, not the effective rate from the income statement.
Estimate the residual value conservatively - overestimating it biases the analysis toward buying.
Include all maintenance costs borne by the buyer that would be the lessor's responsibility under a lease.
Why This Page Exists
Built to make lease vs buy decisions with ASC 842 in the picture
ASC 842 eliminated the off-balance-sheet advantage of operating leases. This page compares both options on an NPV basis with tax shields, residual value, and balance sheet impact so finance teams can make informed decisions.
The functional tool stays on top so users can solve the immediate problem before reading a guide.
The result cards explain what the output means instead of leaving users with a raw number.
Ledger Summit can build richer capital budgeting tools later, but this page delivers value now.
FAQ
Lease vs buy questions, answered directly
Short answers for searchers and answer engines.
Before ASC 842, operating leases were off-balance-sheet, giving leasing a perceived advantage. Now both options appear on the balance sheet, so the analysis focuses on NPV of after-tax cash flows, residual value, and maintenance costs rather than balance sheet presentation.
The buy NPV includes the purchase price, depreciation tax shields, annual maintenance costs, and the present value of the expected residual value at the end of the analysis period.
The lease NPV includes the present value of all after-tax lease payments over the lease term. Under ASC 842, the lease liability is also recognized on the balance sheet.
No. All calculations are processed entirely in your browser. Nothing is sent to a server.
Yes. If you need multi-asset comparisons, scenario modeling, or integration with your capital budgeting process, Ledger Summit can build a production version around your workflow.
Next Step
Need multi-asset lease vs buy modeling?
Use the free comparison for individual assets. If you need portfolio-level analysis, scenario modeling, or integration with your capital budgeting process, Ledger Summit can build the next layer.
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