Likely term

Likely term is an important concept within the lease accounting standards of the Governmental Accounting Standards Board (GASB), Financial Accounting Standards Board (FASB), and International Accounting Standards Board (IASB). According to these standards, payments must be amortized for the entire likely term of a lease. This likely term amortization calculates a more accurate financial impact analysis for the leases in a business portfolio.

The likely term of the lease is a calculated duration from the start date to the end date of the likely term for the lease. The calculation is as follows: (End Date – Start Date) = Likely Term (Duration) where the start date is represented by the Commencement Date field and the end date is represented by the Likely Term Expiration Date field.