Right-of-use (ROU) asset
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Asset recognized by a lessee under ASC 842 representing the right to use an underlying leased asset over the lease term.
Right-of-use (ROU) asset in plain English
When a company rents (leases) something big like a building or a fleet of trucks for years, accounting rules now say: you don't own it, but you DO control the right to use it — and that right itself is valuable, so put it on your books as an asset. That asset is the 'right-of-use' (ROU) asset. Think of a year-long apartment lease: you don't own the apartment, but your guaranteed right to live there for the year is worth something real. The rules (ASC 842) make companies show this so an outsider can see the resources — and the rental commitments — the business is really relying on, instead of hiding leases off to the side.
Also called: ROU
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