Right-of-Use Asset

Definition: Right-of-Use (ROU) Asset is the lessee's right to use an underlying leased asset over the lease term, recognized on the balance sheet under ASC 842…

Right-of-Use (ROU) Asset is the lessee's right to use an underlying leased asset over the lease term, recognized on the balance sheet under ASC 842 and IFRS 16. At commencement, ROU Asset = Lease Liability + Prepaid Lease Payments + Initial Direct Costs − Lease Incentives Received. For finance leases, the ROU asset is amortized straight-line, and interest is recognized separately on the lease liability. For operating leases under US GAAP, the ROU asset is amortized to produce a single straight-line lease expense.