Accumulated Depreciation - Right-of-Use
Total depreciation charged so far on Right-of-Use Assets. A credit balance under Right-of-Use Assets on the Balance Sheet.
In detail
Accumulated Depreciation - Right-of-Use is the contra account under Right-of-Use Assets that collects the depreciation charged on leased property and equipment. It carries a credit balance, so the group shows the lease assets at cost less this account. The monthly Depreciation Entry built from the lease asset's schedule debits Depreciation - Right-of-Use Assets and credits here; for the Rs 8,10,000 Thamel office over 36 months that is Rs 22,500 a month. When the lease ends, the asset's cost and this balance are both removed so nothing lingers. Posting ordinary PPE depreciation here by mistake understates the fixed asset depreciation and overstates lease depreciation, which the auditor's lease schedule will expose.
Formula
Balance = Sum of monthly lease depreciation to date = Months elapsed x (Initial value / Lease term months).
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Depreciation - Right-of-Use Assets | Rs 22,500 | |
| Accumulated Depreciation - Right-of-Use | Rs 22,500 |
How to record it in BRAccount
- 01Go to Assets > Asset Category and open Right-of-Use Assets; its accumulated depreciation account is this ledger.
- 02Open the lease Asset under Assets > Asset; the schedule lists Rs 22,500 per month.
- 03At month end the Depreciation Entry posts; confirm it in Nepal IRD > Monthly Close.
- 04Open this ledger from Accounts Setup > Chart of Accounts to read the monthly credits.
- 05When the lease ends, scrap the Asset so the cost and this balance are reversed together.
When to use it
Posted by the monthly depreciation Journal Entry from the lease asset's schedule. Cleared when the lease ends.
Example from the demo books
Dr Depreciation - Right-of-Use Assets Rs 22,500, Cr Accumulated Depreciation - Right-of-Use Rs 22,500 for one month of the Thamel office lease.