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Right-of-use (ROU) assets are non-monetary assets that businesses must record when they enter a lease contract. These assets give a company the right to use an asset for a specified period, usually on periodic rent payments. ROU accounting helps businesses to control their liabilities and manage their cash flow.

Consistent with the classification of property, plant, and equipment, the right-of-use asset should generally be classified as non-current for the entire lease term.

1 Lessee accounting for foreign currency leases - after ASC 842. A lessee classifies a lease as either a finance or operating lease based on the criteria prescribed in ASC 842, Leases. One of those criteria requires reporting entities to determine the present value of the lease payments.

In lease accounting, a right-of-use asset, or ROU asset, is an asset that represents a lessee's privilege to use a leased item over the duration of an agreed-upon lease term. In other words, the lessee is granted the authority to obtain the economic benefit from the usage of an asset owned by another entity.

Monetary and non-monetary items Common examples of monetary items include trade receivables and payables or loans. Other examples are given in paragraph IAS 21.16. Non-monetary items lack the right to receive (or the obligation to deliver) a fixed or determinable number of units of currency.

If the lease modification does not create a separate contract, the lessee remeasures the lease liability and right of use ( ROU ) asset at the modification date, and reassesses the following: Lease term and purchase options.

Essential feature of a non-monetary item is the absence of a right to receive (or. an obligation to deliver) a fixed or determinable number of units of currency. Examples include: amounts prepaid for goods and services; goodwill; intangible assets; inventories; property, plant and equipment; right-of-use.