Peoplesoft ASC 842 Operating Lease Accounting

A Lessee will recognize lease liability and an ROU asset for all leases

For Operating leases, there are two approaches to subsequent measurement, which will yield the same result

Method 1 - Derives the Carrying Amount of the ROU Asset from the measurement of the lease liability at each reporting date.

ROU Asset = Lease Liability Carrying Amount + Unamortized IDC +/- Prepaid/(accrued) Lease Payments - Unamortized Balance of Lease Incentives received

Method 2 - amortizes the ROU asset, and the periodic amortization is the difference between the Straight Line Total Lease Cost for the Period (including amortization of Initial Direct Costs) and the periodic Accretion of the Lease Liability using the Effective Interest Method