Right-of-use asset
In accounting, right-of-use asset means the lessee's right to use an underlying asset for the lease term — the lease liability plus prepaid lease payments and initial direct costs, less incentives received.
- Layer
- Lexicon
- Defined in
- Lexicon
- Also called
- ROU asset
- Components
- 1
Authority
This definition follows ASC 842-20-30-5.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Right-of-use asset, in use
Quoted from the 2 documents that use the word — what it does to an interface, in the spec's own sentence.
Both frameworks put nearly all leases on the balance sheet: a right-of-use asset and a lease liability.
Schedules, accruals & roll-forwards — 7. Leases (ASC 842 / IFRS 16)
ROU asset and lease liability as parallel columns — they amortize on different curves and diverge.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- leased asset (owned by the lessor)
Components that render this
The concept is not documentation-only. These are the components that name it in their specification, grouped and stated exactly as the catalog states them.
9Accounting core (GL)
Family specComponents that render the terms it depends on
Little in the catalog names this concept outright, but its definition is built out of others that are named. These render liability, asset.
Terms this one depends on
- Lease liabilityThe present value of the lease payments not yet paid, discounted at the rate implicit in the lease or, if not determinable, the incremental borrowing rate
- LiabilityA present obligation of the entity to transfer an economic benefit (FASB CON 8 ¶E37)
- AssetA present right of the entity to an economic benefit (FASB CON 8 ¶E16)
Also in Fixed assets & leases
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Journal entry for an operating lease under ASC 842At commencement, debit Right-of-use asset and credit Lease liability for the present value of the payments. Each payment debits Lease liability and credits Cash; each month-end debits Operating lease cost for the straight-line cost and credits Lease liability for the interest and the right-of-use asset for the rest.Entry
- Journal entry for a finance lease under ASC 842At commencement, debit Right-of-use asset and credit Lease liability for the present value of the payments. Each payment debits Lease liability and credits Cash; each month-end debits Interest expense and credits Lease liability for the interest, and debits Amortization expense and credits the right-of-use asset for straight-line amortization.Entry
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.