> ## Documentation Index
> Fetch the complete documentation index at: https://docs.tangoanalytics.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Lease accounting overview

> Understand the components of a lease accounting schedule in Tango.

Tango's lease accounting module calculates the right-of-use (ROU) asset and lease liability schedules required under FASB Topic 842, IFRS 16, FASB Topic 840, and IAS 17. Understanding the key components helps you set up and maintain accurate schedules.

## Accounting standards supported

| Standard | Description |
| - | - |
| FASB Topic 842 | Current US GAAP standard (operating and finance leases) |
| FASB Topic 840 | Legacy US GAAP standard |
| IFRS 16 | International standard (finance treatment for most leases) |
| IAS 17 | Legacy international standard |

## Lease classification

The **Lease Classification Test** (optional) determines whether a lease is an **operating lease** or a **finance lease** under FASB 842, or a **capital lease** under FASB 840.

* **Operating lease** — ROU asset and liability recorded; lease expense recognized on a straight-line basis
* **Finance lease** — ROU asset and liability recorded; amortization and interest expense recognized separately

## Key components reviewed before creating a schedule

### 1. Key dates (Basic Info)

* **Possession Date** — becomes the default schedule begin date
* **Current Term Begin / End** — defines the base term

### 2. Options and Terms

Any renewal option with **Include in Accounting Schedule** checked extends the schedule end date. The latest such option end date becomes the default schedule end.

### 3. Recurring Costs

Only payment types that exist as recurring cost records can be included in the schedule. The schedule pulls dollar amounts from these records for the selected payment types.

## Schedule lifecycle

1. **Draft** — created and under review; not included in reports or integrations
2. **Active** — the current live schedule; included in reports and integrations
3. **Archived** — superseded by a recalculation or modification; retained for history
4. **Recalculate** — the status flag triggered when the schedule needs to be updated due to lease changes

## Financial inputs

| Input | Description |
| - | - |
| Included Payment Types | Recurring cost types to include in the schedule calculation |
| Direct Costs | Initial direct costs capitalized at commencement |
| Incentives | Lease incentives received from the landlord |
| Favorable/Unfavorable Lease | Purchase price variance |
| Deferred Carryover Balance | Balance carried from a prior schedule |
| Incremental Borrowing Rate | Discount rate used to calculate the lease liability |

## Accrual batch workflow

Accounting entries follow this flow:

1. Accounting schedule is created and set to Active
2. Accrual batch is generated for the period
3. Batch is approved by an authorized user
4. Batch is exported to the ERP (or periods are manually posted)
5. Period status changes to Processed — the period is locked

<Note>Once a period is processed, it cannot be changed. A new schedule version must be created to correct processed periods.</Note>