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ROU Asset Impairment CalculatorOperating Lease Cost After Impairment

What is this money worth, or what does it cost, over time?

Impairment of a right-of-use asset, straight-line amortization afterward and the first-year lease cost under ASC 842-20-35-10.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Impairment loss
$300,000
Charge to the ROU asset
ROU asset after impairment
$600,000
Straight-line ROU amortization per year
$120,000
Drawn to one scale
Impairment loss$300,000
ROU asset after impairment$600,000
Straight-line ROU amortization per year$120,000
Interest on lease liability, first year$47,500
Lease cost, first year after impairment$167,500
Lease cost, first year without impairment (payment)$219,000
All results
MeasureResult
Impairment loss$300,000
ROU asset after impairment$600,000
Straight-line ROU amortization per year$120,000
Interest on lease liability, first year$47,500
Lease cost, first year after impairment
Front-loaded: no longer level each year
$167,500
Lease cost, first year without impairment (payment)$219,000
How this was worked out
Work shownrecomputed as you type
Impairment = carrying amount - fair value (when the asset group fails recoverability under ASC 360)
Amortization = ROU after impairment / remaining term
First-year cost = amortization + liability x rate

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Impairment = carrying amount - fair value (when the asset group fails recoverability under ASC 360)
  • Amortization = ROU after impairment / remaining term
  • First-year cost = amortization + liability x rate

How it works

A lessee tests an ROU asset for impairment under ASC 360 at the asset group level. After an impairment, ASC 842-20-35-10 measures the ROU asset at its carrying amount after the impairment less accumulated amortization, amortized from the impairment date to the earlier of the end of its useful life or the end of the lease term.

For an operating lease, ASC 842-20-25-7 then calculates the single lease cost as straight-line amortization of the impaired ROU asset plus accretion of the lease liability. The cost is no longer level: accretion falls as the liability is paid down.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Does the lease liability change?

No. The impairment reduces only the ROU asset. The liability keeps its measurement.

Where is the impairment presented?

In the same line as other ASC 360 impairment losses for the asset group.

Is the amortization still straight-line?

Yes, straight-line over the remaining term. The combined cost is front-loaded because interest is higher early on.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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