Depreciation Charge: Days or Equal Months
The right-of-use asset is depreciated straight-line over the lease term. Depreciation Charge, under Organisation, Calculation Methodology, decides whether that straight line is measured in days or in calendar months. Every organisation starts by day count; choose Equal monthly amounts for the same charge in every whole calendar month, as a fixed-asset register gives.
The two settings
Both are straight-line in time and both charge the whole asset over the term. They differ only in how the time is measured, so they spread the same total differently between months and years. On 100,000 over five years from 1 April, the first twelve months charge 19,989.07 by day count and 20,000.04 on equal monthly amounts; on a 13-month lease of 100,000 the same twelve months differ by between about 97 and 568, depending on the month it starts.
A quarterly lease on Equal monthly amounts
By day count
The asset is divided by the days in the term and each schedule row is charged for the days it covers. A 31-day month carries more than a 28-day month, and on an English Quarter Day lease the four quarters (91, 97, 87 and 90 days) differ by about five per cent. This is the starting point for every organisation and the only behaviour before the setting existed.
Equal monthly amounts
The term is counted in months from the commencement date, so a lease from the 25th of one month to the 24th of a later one is a whole number of months, and a remainder of days counts as its share of the month it falls in. Every whole calendar month carries the asset divided by that count, to within a penny of rounding. A part month at the start is charged for its days; the part month at the end takes the balance, so a term from 25 March to 24 April the next year charges exactly one thirteenth a month. Where the schedule rows are calendar months, as with rent due on the 1st, each row shows that charge. Rows that run between other dates, such as rent due on the 15th, cover parts of two calendar months, so they still vary from row to row, most around February (on 100,000 over five years, between 1,586.02 and 1,747.31, against 1,533.41 to 1,697.70 by day count). Monthly Charges set to Every calendar month does not change that: it divides each row at the month end, so a lease paid on the 15th shows two part-month rows a month, which together come to the same charge every month.
What never changes
The lease liability, the discount rate, the opening asset, every payment and every liability balance are identical on both settings, and interest always accrues by day. Only the depreciation rows and the asset balances between the start and the end of the lease move. The schedule still ends at nil, a lease with a purchase option still depreciates over its useful life, and a modification, an impairment or a termination spreads what is left on the same measure. An agreed shorter term keeps the share of the asset that the remaining term represents on that measure too.
Changing the setting
The change spreads every lease's depreciation again over its whole term, including months already in your ledger, so it is refused while any journal stands as posted. To change it, reverse in your ledger any journals you recorded as posted by hand and then unmark those months in Close Checks, and reverse postings made to your accounting system from Posting history on the Reports page, which removes them from the accounting system itself. Some postings to the accounting system cannot be reversed in Lease102 (those made before 23 August 2026, and any made to Sage or Business Central); where they exist, the message says so, and Lease102 support can help. Where leases exist, saving asks for confirmation first. A lease that carries a modification keeps its figures until the modification is deleted and applied again, and a lease whose schedule is frozen keeps its figures while it is frozen. Each schedule is rebuilt the next time it is read, so a report run straight afterwards may mix the two bases until every lease has been opened. Shortly after saving, the Year 1 depreciation of each transitioned lease, shown on the Transition screen, its memo and the reconciliation workbook, moves by the difference the setting makes, and each move is recorded in that lease's audit trail. The memo names the basis of the lease's own Year 1 figure, and says why where a modification or a frozen schedule keeps it on the earlier basis.
100,000 asset, five years from 25 March 2026, English Quarter Days