The current value, after discounting for interest, of money to be paid (or received) in the future. For instance, with an interest rate of 5%, the present value of $1050 one year from now is $1000 (if you put that amount in the bank in an account paying 5% interest, you would receive $1050 a year from now). For a normal capital lease under FAS 13, the gross asset and original obligation are equal to the present value of the net capital rents using the capital rate as the interest rate. The present value of the rents at the Lessee’s incremental borrowing rate is used for the 7(d) capitalization test. Under ASC 842/IFRS 16/GASB 87, the Right-of-Use asset and initial liability can be adjusted (independently) from the present value for initial direct costs, lease incentives, and rent paid on or before the first day of the lease.