What does right-of-use asset mean on the CPA exam?
Right-of-use asset. The lessee's asset representing its right to use the leased item for the lease term. Built from the lease liability and adjusted for prepayments, direct costs and incentives.
Defined against ASC 842-20-30-5.
Which CPA exam sections use right-of-use asset?
Right-of-use asset appears in the BAR section of the CPA exam.
Other terms defined against ASC 842-20
- lease liability: The lessee's obligation to make the remaining lease payments, measured at their present value.
- operating lease: A lease that does not transfer control.
Related terms
- deferred tax asset: A future tax saving created when an item is deducted for accounting before it is deducted for tax, or when a loss can be carried forward.
- contract asset: The right to consideration for goods or services already transferred, where the right still depends on something other than the passage of time.
- lease term: The non-cancellable period, plus any option period the lessee is reasonably certain to take, plus any period controlled by the lessor.
- accretion expense: The increase in an asset retirement obligation from the passage of time, measured by the interest method at the credit-adjusted risk-free rate in effect when the liability was first measured.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.
- carrying amount: What an asset or liability is currently shown at on the balance sheet: its original amount adjusted for depreciation, amortization, impairment or accrual.