What is a right-of-use asset? The right-of-use asset pertains to the lessee’s right to occupy, operate, or hold a leased asset during the rental period. In the old lease standard, an asset – for example, a cargo truck – would be recorded straight to the balance sheet.

What does ROU asset stand for?

One of the most significant changes for lessees when applying the new ASC 842 lease accounting standard is the recognition of right-of-use (ROU) assets and lease liabilities. … The leased asset has no alternative use to the lessor at the end of the term because of its specialized nature.

Where does ROU asset go on balance sheet?

A right of use asset refers to the amount recognized by a lessee on its balance sheet that represents its right to use an asset under a lease contract. It is either presented on the face of the balance sheet or as part of fixed assets.