In this example, operating lease contract period is 5 years. The amount to be paid is 1,000 euros each year and the amount is booked on a yearly base. The first year is rent free. In this case the first payment is not registered, the amount is straight lined over the total contract period, so every year 800 euro is booked. This introduces a lease accrual.

The lease accrual: Represents the difference of the amount to be booked vs. the amount to be paid in the accounting period. The rent free period triggered the difference and this difference is booked as lease accrual.

The balance: Represents the total difference between the amounts that are booked vs. the amounts that are paid calculated from the start of the contract period. It is a running total of the lease accrual.

In this case the first period registers a large accrual and the difference will be corrected in the next four years.