FRS 102 Section 20 requires UK and Irish lessees to disclose ROU asset movements, lease liability maturity analyses, short-term lease expenses, and key judgements. Here is exactly what each disclosure requires and what data drives it.
FRS 102 Section 20 requires UK and Republic of Ireland lessees to disclose right-of-use asset movements by class, interest expense on lease liabilities, short-term and low-value lease expenses, variable lease payment details, total cash outflow for leases, the maturity analysis of undiscounted lease liabilities, and the significant judgements applied in determining lease terms and discount rates. Producing all of these from a spreadsheet is time-consuming, error-prone, and involves a manual rebuild each period. LOIS generates every required disclosure automatically from the same data that drives the calculations.
Updated June 2026.
The FRS 102 changes to lease accounting are effective for periods commencing on or after 1 January 2026. For organisations with a December year-end, that means the first compliant accounts are due by December 2026; June year-end organisations reached the transition point in June 2026. The disclosure note is not a formality at the back of the accounts. It is the document that auditors use to verify that what sits on the balance sheet is consistent with the underlying lease data. Getting it right in the first year matters more than most finance teams expect. For an overview of the FRS 102 changes and what they mean for UK and Irish organisations, start with our guide: What is FRS 102? A plain-English guide for UK and Irish finance teams.
LOIS advises finance teams that the first year of FRS 102 compliance is when disclosure quality is most scrutinised, not least. Auditors learned from the IFRS 16 transition experience in listed markets what a poor lease note looks like, and they are applying that knowledge to FRS 102 engagements. The Financial Reporting Council has signalled increased focus on lease disclosure quality following its review of IFRS 16 disclosures, and its thematic review findings are already influencing the questions UK audit teams ask at year-end.
The practical risk is this: an incomplete or internally inconsistent disclosure note creates audit findings that take time and cost to resolve. A maturity analysis that uses discounted rather than undiscounted figures, or an ROU asset rollforward that is missing the modifications column, will be queried. Each query requires you to go back to the underlying data, correct the output, and reconcile the corrected figures through to the accounts. On a spreadsheet-based process, that is a material piece of rework at the worst possible time of year.
FRS 102 Section 20 requires lessees to produce seven categories of disclosure covering ROU asset movements, interest expense, short-term and low-value lease expenses, variable payments, total cash outflows, the maturity analysis of undiscounted liabilities, and significant judgements. LOIS generates every category automatically from the same data that drives the underlying calculations. The requirements are aligned with IFRS 16 paragraphs 51 to 60, with a small number of simplifications that reduce the burden for UK and Irish entities compared to listed-company reporting. The full text of the FRS 102 standard is published by the Financial Reporting Council at frc.org.uk.
The required disclosures fall into three groups: quantitative items that must be presented in tabular form, the maturity analysis of lease liabilities, and qualitative disclosures about significant judgements. The table below sets out each required item, the data that drives it, and whether LOIS produces it automatically.
| Disclosure item | Data required to produce it | LOIS produces automatically |
|---|---|---|
| Depreciation charge for ROU assets by class | Amortisation schedule per lease, summarised by asset class (property, vehicles, equipment, other) | Yes |
| Interest expense on lease liabilities | Interest column from the liability amortisation schedule, aggregated across the portfolio | Yes |
| Short-term lease expense (not included in depreciation above) | Payments on leases under the 12-month term exemption, tracked separately in the lease register or GL | Yes |
| Low-value lease expense (not included in depreciation above) | Payments on assets under the low-value exemption, expensed directly to the P&L | Yes |
| Variable lease payments not included in lease liability measurement | Turnover-linked rents, contingent rents, or other variable payments excluded from the liability; tracked via GL | Yes |
| Total cash outflow for leases | All lease cash payments during the period: principal repayments, interest, short-term, low-value, and variable | Yes |
| Closing carrying amount of ROU assets by class (including full rollforward) | Opening balance, additions, modifications, depreciation, impairment (if any), closing balance, per asset class | Yes |
| Maturity analysis of undiscounted lease liabilities | Contractual payments before discounting, in time bands: under 1 year, 1–5 years, over 5 years; reconciled to balance sheet carrying amount | Yes |
| Significant judgements: lease term determination and discount rate | Documented rationale for lease term decisions (including extension options assessed) and the obtainable borrowing rate selected per lease | Data captured; narrative drafted per lease |
Two items in this table deserve closer attention because they are where most disclosure deficiencies arise. The ROU asset rollforward must present the full movement schedule: opening balance, additions from new leases commenced in the period, upward and downward modifications, depreciation charged, impairment losses if any, and the closing balance, all broken down by asset class. Presenting only opening, depreciation, and closing is the most common incomplete rollforward the LOIS team sees during onboarding reviews. For the underlying mechanics of how the right-of-use asset is measured, depreciated, and modified, see: What is a right-of-use asset? A plain-English IFRS 16 guide. The maturity analysis must use undiscounted contractual payments, not the discounted carrying amounts from the balance sheet. The two figures will be materially different for any lease with more than a year of payments remaining, and using the wrong basis is a clear audit finding. For a detailed explanation of how lease liabilities are measured and amortised under FRS 102, see: What is a lease liability under FRS 102? A plain-English guide.
FRS 102 Section 20 disclosure requirements are built on the same framework as IFRS 16 paragraphs 51 to 60, but with several concrete simplifications that reduce the reporting burden for UK and Irish entities. LOIS supports both standards, and the differences matter most for group entities where an IFRS 16 disclosure pack for the parent cannot be applied unchanged to a subsidiary reporting under FRS 102. Finance teams in that position should confirm the applicable requirements at each entity level with their auditors before year-end.
No weighted-average incremental borrowing rate disclosure. IFRS 16 paragraph 55 requires entities that applied the modified retrospective transition approach to disclose the weighted-average lessee's incremental borrowing rate at transition. FRS 102 has no equivalent requirement. The obtainable borrowing rate is used in the calculations, but the weighted-average rate does not need to be disclosed in the note.
No sublease disclosure requirement. IFRS 16 requires lessees who are also intermediate lessors to disclose sublease income and the maturity analysis of sublease receivables. FRS 102 does not carry an equivalent disclosure requirement for most entities.
Simplified discount rate terminology. FRS 102 uses "obtainable borrowing rate" rather than IFRS 16's "incremental borrowing rate." The practical application is similar, but the FRS 102 wording acknowledges that for many UK and Irish entities the rate will be the rate a lender would charge for a similar borrowing, rather than a rate derived from a detailed credit assessment.
Finance teams preparing group accounts with entities under both standards should confirm with their auditors which disclosures are required at each entity level, rather than assuming the IFRS 16 note template can be used for FRS 102 subsidiaries without review.
For a full side-by-side comparison of the two standards, including transition rules, exemptions, and measurement differences, see our guide: FRS 102 vs IFRS 16: key differences finance teams need to know.
LOIS has identified four disclosure errors that appear consistently in first-year FRS 102 accounts, based on what the LOIS team saw during IFRS 16 transition reviews and what the FRC has flagged in its disclosure quality publications. Each one is avoidable with the right data structure in place before year-end, not after.
Incomplete ROU asset movement schedule. The most common deficiency. Finance teams present an abbreviated table showing opening balance, depreciation for the period, and closing balance. The standard requires the full movement: additions from new commencements, upward and downward modifications, impairment losses recognised, and all of these broken down by class of underlying asset. An auditor who cannot reconcile the closing ROU asset balance to the lease register will request a full rollforward, which must then be prepared under time pressure.
Maturity analysis presented on a discounted basis. FRS 102 Section 20 requires the maturity analysis to show the undiscounted contractual payments remaining under each lease, split across time bands. For a property lease with five years remaining, the undiscounted figure will be meaningfully higher than the discounted carrying amount on the balance sheet. Presenting the discounted figures, or failing to reconcile the undiscounted total to the balance sheet carrying amount, are both disclosure deficiencies.
Short-term and low-value lease expenses not disclosed separately. The standard requires these two categories to be shown as discrete line items. Many organisations aggregate them into a single "other lease expense" line or, worse, present them within the ROU asset depreciation figure without any separate disclosure. Auditors will ask for the split, and the split must come from the lease register, not from the GL account.
Qualitative judgement note inconsistent with the quantitative data. A qualitative note that states "the group does not generally expect to exercise extension options" while the quantitative rollforward shows dozens of leases with extensions included in the lease term will be queried. The judgement note must describe what the numbers actually reflect, not what the standard minimum disclosure looks like. For the specifics of how ROU assets are recognised and depreciated, see our guide: FRS 102 right-of-use assets: a plain-English guide.
LOIS produces every FRS 102 Section 20 disclosure automatically from the same data that drives the IFRS 16 and FRS 102 calculations. There is no separate disclosure workbook, no manual extraction from the amortisation schedule, and no reconciliation step between the lease register and the note. The ROU asset rollforward, the maturity analysis of undiscounted liabilities, the interest and depreciation totals by class, and the total cash outflow figure are all generated as a locked output at the end of each reporting period.
The practical difference this makes is in audit readiness. When an auditor requests the lease disclosure supporting workpapers, the LOIS output can be provided directly: every figure ties back to the lease register, every modification is timestamped in the audit trail, and the maturity analysis reconciles to the balance sheet carrying amount automatically. There is no gap between what the system calculated and what the note discloses, because they come from the same source.
For organisations managing the full transition to FRS 102, including lease identification, data capture, and first-period close, the LOIS platform can be supported by our CA-qualified lease accounting specialists through a managed service. For more on how that works in practice, see: What is a managed service for lease accounting?
Does FRS 102 Section 20 require a weighted-average incremental borrowing rate disclosure?
FRS 102 Section 20 does not require lessees to disclose the weighted-average incremental borrowing rate, which is one of the most practical simplifications relative to IFRS 16. Under IFRS 16 paragraph 55, entities that applied the modified retrospective transition approach must disclose the weighted-average lessee's incremental borrowing rate at transition. FRS 102 carries no equivalent requirement. The obtainable borrowing rate drives the calculations but does not need to appear as a disclosed figure in the accounts.
What is the difference between the lease liability carrying amount and the undiscounted maturity analysis?
Under FRS 102 Section 20, the lease liability carrying amount on the balance sheet is the present value of future lease payments discounted at the obtainable borrowing rate, while the maturity analysis discloses the undiscounted contractual cash flows grouped by time band, before any discounting is applied. The two figures serve different purposes in the note. The carrying amount shows what the liability is worth today; the maturity analysis shows the actual cash the entity is committed to pay. For leases with several years remaining, the undiscounted total will be noticeably higher than the balance sheet figure, and the note should include a reconciliation bridging the two.
Do short-term and low-value lease expenses need to be shown as separate lines?
FRS 102 Section 20 requires short-term and low-value lease expenses to be presented as two distinct line items in the disclosure note, not combined into a single exemption expense figure or buried within the depreciation charge for on-balance-sheet leases. Short-term lease expense covers leases with a remaining term of 12 months or less at commencement. Low-value lease expense covers leases where the underlying asset has a low value when new, regardless of the lease term. Each category must be disclosed separately so that readers can assess the scale and nature of the exemptions applied.
How many time bands are required in the maturity analysis?
FRS 102 Section 20 requires the maturity analysis of undiscounted lease liabilities to be presented in at least three time bands: less than one year, one to five years, and more than five years. These three bands are the minimum; entities with significant lease portfolios, particularly large property portfolios with leases extending beyond ten years, may present more granular banding where it adds useful information for readers. The total across all bands should be reconciled to the balance sheet carrying amount.
What qualitative information must the FRS 102 lease note include?
FRS 102 Section 20 requires the qualitative section of the lease note to describe the nature and extent of the entity's leasing activities and the significant judgements applied in determining lease terms, discount rates, and variable payment arrangements. The description must be genuinely consistent with the quantitative disclosures. A qualitative note describing a conservative approach to extension options, while the balance sheet reflects dozens of extended lease terms, will be identified as an inconsistency at audit. The judgements documented must reflect the decisions that actually produced the numbers in the note.
LOIS produces every FRS 102 disclosure automatically
ROU asset rollforwards, undiscounted maturity analyses, and all required note disclosures, generated from the same data that drives your calculations. No manual rebuild. No reconciliation gap at audit.
See the LOIS FRS 102 platform
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