Asset category: Right-of-Use Assets

Right-of-Use Assets holds leased premises or equipment that lease accounting brings onto the balance sheet as if owned, with a matching lease liability. The demo chart has Right-of-Use Asset - Property - YFF and Right-of-Use Asset - Equipment - YFF, their own Accumulated Depreciation - Right-of-Use - YFF, and the expense Depreciation - Right-of-Use Assets - YFF. The asset is recognised at the present value of the lease payments and depreciated straight line over the lease term, while each rent payment reduces the liability and books interest. Small businesses in Nepal often skip this and expense rent; use the category only when your auditor asks for lease accounting.

Monthly depreciation = Right-of-use asset value / Lease term in months; Rs 30,00,000 / 60 = Rs 50,000

1. 01Go to Assets > Asset Category and open Right-of-Use Assets; confirm its own accumulated depreciation account.
2. 02Go to Invoicing > Journal Entry > New and post the entry below to recognise the lease.
3. 03Go to Assets > Asset > New, tick Is Existing Asset, enter the value and lease term, and submit.
4. 04The schedule posts monthly depreciation to Depreciation - Right-of-Use Assets - YFF.
5. 05Record each rent payment as Dr Lease Liabilities and Interest Expense, Cr Bank.

Pick it when a long lease is brought onto the balance sheet.

A 5 year office lease recognised at Rs 30,00,000.