Subsequent Accounting for Operating Leases

Single Lease Expense

Operating leases also recognize both an ROU asset and lease liability. However, lessees record a single lease expense on a generally straight-line basis over the lease term, even though the liability continues to be measured using the effective interest method.

• Single lease expense each period.
• Lease liability decreases over time.
• ROU asset is reduced systematically.
• Expense pattern is generally straight-line.