The formula to calculate the Adjusted Lease Balance (ALB) is:
\[ ALB = OB - PM \]
Where:
An adjusted lease balance is the remaining amount owed on a lease after accounting for any payments that have already been made. This figure is crucial for both lessees and lessors to understand the current state of the lease. The adjusted lease balance helps in determining how much more needs to be paid to fulfill the lease agreement. It is particularly useful in scenarios where the lease terms are renegotiated or when considering early termination of the lease.
Let's assume the following values:
Using the formula:
\[ ALB = 10,000 - 3,000 = 7,000 \]
The Adjusted Lease Balance (ALB) is $7,000.