IFRS 16 Lease Calculator
for Technology
Pre-configured for technology entities with data centre leases, cloud infrastructure agreements, and IT equipment portfolios. Addresses the low-value asset exemption assessment and rapid obsolescence considerations.
Lease liability, evidenced.
Not just estimated.
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IFRS 16 for Technology: practical guidance
Technology companies present unique IFRS 16 challenges driven by the nature of their lease portfolios: data centre space, office premises in high-cost tech hubs, IT equipment with rapid obsolescence, and cloud infrastructure arrangements that may or may not contain lease components. The low-value asset exemption (IFRS 16.5(b)) is particularly relevant for technology companies with large volumes of individual IT assets — laptops, monitors, network equipment — that may each fall below the approximately US$5,000 threshold.
Measurement considerations for Technology
For data centre leases, the lease identification assessment under IFRS 16.9 is critical. A co-location agreement may or may not be a lease depending on whether the customer has the right to control the use of an identified asset. If the customer leases dedicated racks, cages, or suites within a data centre, this is typically a lease. If the customer purchases computing capacity without controlling specific physical assets, it is a service arrangement. Cloud computing arrangements (IaaS, PaaS, SaaS) are generally service contracts rather than leases unless dedicated physical infrastructure is allocated.
ROU asset depreciation for Technology
Technology ROU assets for IT equipment and data centre space must consider rapid obsolescence. The useful life of IT equipment is typically 3–5 years, and the ROU asset should be depreciated over the shorter of the useful life and the lease term. For data centre leases, the useful life of the space itself is generally longer than the lease term, so the lease term drives depreciation. However, technology refresh cycles may create practical considerations — if an entity expects to upgrade data centre specifications before lease end, this may affect the assessment of extension option exercise.
Industry-specific considerations
Technology companies frequently enter into complex arrangements combining hardware, software, support, and hosting. The first step is always lease identification (IFRS 16.9–11): does the arrangement contain a lease? Key indicators include whether the customer controls physically distinct assets, whether the supplier has substantive substitution rights, and whether the customer directs how and for what purpose the asset is used. For software licences, IFRS 16 explicitly excludes licences of intellectual property (IFRS 16.3(e)), so software licences are accounted for under IFRS 15 or IAS 38.
Worked Example: 4-Year Data Centre Co-location Lease
A technology company leases dedicated data centre space (two racks plus power and cooling) for 4 years commencing 1 September 2025. Monthly payments are €22,000 payable in arrears, of which €5,000 relates to power and connectivity services (separated as non-lease component). The company's IBR is 5.0%. Initial direct costs (network cabling, security setup) total €8,000.
Audit considerations
For technology company audits, the lease identification assessment (IFRS 16.9) is a key area of auditor judgment. ISA 500 requires sufficient appropriate audit evidence — for complex IT arrangements, the auditor may need to involve IT specialists to understand the technical substance of the arrangement and determine whether an identified asset exists.