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The ROU assets template is a fixed-asset-register-style working paper for the right-of-use assets created when a lease is capitalised. It groups the right-of-use assets recognised in the Leases Data template by asset class (Land and buildings, Plant and machinery, and Motor vehicles), depreciates each one, and reconciles the closing net book value and depreciation charge back to the trial balance. It is designed to be used together with the Leases Data template, which must be added and populated first, and normally alongside the Lease liabilities template as well.

Table of contents 

When should I use this template?

Use this template whenever there are right-of-use assets on the balance sheet that need to be depreciated and reconciled, following on from leases recorded in the Leases Data template. If a lease has been assessed as short-term or low-value and the exemption has been applied, it will not have a right-of-use asset to depreciate and does not belong in this template.

Before you start

Make sure the Leases Data template has been added to the workflow, is starred, and has the relevant leases entered with their asset class, right-of-use asset value and lease term calculated. This template reads that information directly and will show a prompt if Leases Data has not been set up yet or has not been populated.

Background

Once a lease is capitalised, the right-of-use asset is depreciated over the shorter of its useful life and the lease term, generally on a straight-line basis, in the same way a purchased fixed asset would be depreciated. This template reuses the depreciation logic from Silverfin's other UK fixed asset registers, so if you are familiar with the Fixed assets or Intangible assets working papers, the mechanics here (cost, method, useful life, opening and closing accumulated depreciation, book value) will be familiar.

Step 1: Confirm the account ranges for each category

At the top of the template, each asset class (Land and buildings, Plant and machinery, Motor vehicles) is compared against a default trial balance account range for the cost of that category of right-of-use asset.

Step 2: Review the leases pulled through from Leases Data

Every lease entered in the Leases Data template appears automatically in the table for its asset class, sorted by commencement date, with leases from prior years listed first and a "Current year" marker introduced before any leases added in the current period. The acquisition date and description are shown as links back to the corresponding lease in the Leases Data template, so you can jump straight there if you need to check or amend the underlying details.

Step 3: Complete or override the depreciation fields for each lease

Each lease's right-of-use value and useful life default in from the present value and lease term calculated in the Leases Data template, but every field can be overridden here if needed:

  • ROU Value: defaults to the right-of-use asset value calculated in the Leases Data template.
  • Residual value: enter an estimated residual value if applicable (defaults to nil).
  • sl/rb: choose the depreciation method, straight line (sl) or reducing balance (rb). Straight line is the default.
  • Lease term / Useful life: for straight line, enter the useful life in years (this defaults from the lease term calculated in Leases Data); for reducing balance, enter the rate as a percentage. The depreciation period should be the shorter of the useful life and the length of the lease term.
  • Opening accum. depr: the accumulated depreciation brought forward, which rolls forward automatically from the prior period.
  • Depr this period (YTD): defaults to the calculated depreciation charge for the period (prorated for the number of months since the lease commenced or the start of the year, whichever is later), but can be overridden.

The template calculates the closing accumulated depreciation and net book value from these inputs. A warning icon appears against a lease if the acquisition date is after the period end, if either depreciation figure has been entered as a positive number (depreciation should always be negative), if the residual value is negative or exceeds the acquisition cost, if the residual value exceeds book value under the reducing balance method, or if the resulting book value is negative. Each warning explains what needs correcting.

Step 4: Review the category totals and reconciliation

Each category's table totals the ROU value, opening and closing accumulated depreciation, YTD depreciation and net book value. The closing net book value total is compared automatically against the trial balance range for that category, with an unreconciled indicator and breakdown shown if there is a difference. A summary at the top of the template also compares the total depreciation charge across all categories against the trial balance depreciation expense accounts.

Step 5: Post the depreciation journal (optional)

Within each category, tick Show depreciation journal to see a suggested adjustment crediting the accumulated depreciation account for that category and debiting the profit and loss depreciation expense account, for the difference between the depreciation calculated in the template and what is currently posted. If no account is mapped yet for either side, the journal tells you which default account code to use.

What flows through to the rest of the accounts/workflow?

This template reconciles the right-of-use asset cost and accumulated depreciation for each asset class back to the trial balance, and its depreciation charge feeds into the reconciliation of the profit and loss depreciation expense. It also links back to the Leases Data template (for the underlying lease terms) and works alongside the Lease liabilities template, which reconciles the corresponding liability side of the same leases.

What rolls forward next year?

The closing net book value carries forward as next period's opening ROU value, and the closing accumulated depreciation carries forward as next period's opening accumulated depreciation. The depreciation method and useful life (or percentage, for reducing balance) also roll forward.

Where the data comes from

The right-of-use asset value and lease term default in from the Leases Data template. The account ranges used for the cost of each asset class, the accumulated depreciation accounts and the profit and loss depreciation expense accounts are trial balance mappings.

Frequently asked questions

Why doesn't a category show up even though it has no trial balance balance yet?

A category is shown as soon as there is at least one lease of that asset class in the Leases Data template, even if nothing has yet been posted to the trial balance for it. This makes sure you do not miss recognising the initial journal.

Can I depreciate a right-of-use asset over a shorter period than its useful life?

Yes. Depreciation should be spread over the shorter of the useful life and the lease term, so if the lease term is shorter, use that as the useful life entered here.