Right of Use

Lease accounting - International Financial Reporting Standard 16 (IFRS 16).

(ROU).

Right of Use is a key concept in lease accounting.

Operating lessees must report an ROU asset

"The major change for lessees [under IFRS 16] is that all operating leases must be reported on balance sheet through the creation of a right of use (ROU) asset and corresponding liability.

The ROU asset is calculated based on the present value of future rental cash flows discounted at the rate implicit in the lease or, if this is not available, the incremental borrowing rate, and depreciated over the remaining lease term."

The Treasurer magazine, September/October 2017, p40 - Paul Lippitt and Armaghan Haq.

See also

• Debt
• EBITDA
• Finance lease
• Frozen GAAP
• IFRS 16
• Incremental borrowing rate
• Interest cover
• Interest rate implicit in a lease
• Lease
• Off balance sheet
• Operating lease