Right-of-use asset
An asset representing the lessee's right to use an underlying leased asset during the lease term.
Definition
The right-of-use (ROU) asset is recognised on the balance sheet at the commencement date. It is initially measured at the amount of the lease liability, adjusted for any lease payments made before or at commencement, plus initial direct costs and estimated restoration costs. It is then depreciated — usually straight-line — over the shorter of the lease term and the useful economic life of the underlying asset.
Why it matters
For most businesses with property or equipment leases, the ROU asset is now a material balance sheet item. It must be tracked by asset class for statutory disclosure purposes.
In AuditLease
AuditLease calculates the initial ROU asset value, produces the depreciation schedule, and generates the ROU asset movement note by asset class for inclusion in the statutory accounts.
Related terms
Official sources
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence — so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.