International Accounting Standard 17, dealing with leases.
IAS 17 has been replaced by IFRS 16.
IFRS 16 is mandatory - for companies reporting under international financial reporting standards - from 1 January 2019.
IAS 17 required finance lease liabilities to be accounted for 'on balance sheet'.
It also required the appropriate allocation of the total lease instalments between finance charges and reduction of the outstanding lease liability.
Under IAS 17 the total finance charge was spread in such a way as to produce a constant periodic rate of interest on the remaining balance of the liability.
However, IAS 17 also allowed for some form of approximation to be used to simplify the calculation.
Fully accurate calculation bases for spreading the total finance charge included the Actuarial method.
The Sum of the digits method is simpler to apply, and will normally produce a close approximation.