The Asset Components report is primarily intended for auditing purposes. It shows the individual components of the ROU asset and its depreciation. While the ROU asset is initially the same as the present value of the rent (which is the initial liability for the lease), it is adjusted for the following items: lease incentives, rent leveling (operating lease only), initial direct costs, and asset adjustment. This report shows for each of these items the initial amount (which is included in the ROU asset), the accumulated amount (included in the accumulated depreciation), and the current period's activity (included in the depreciation expense for a finance lease, in the depreciation part of the lease cost for an operating lease). The “gross” values shown represent what would be recorded without any of the adjustments.
Because the various adjustments are combined when the actual depreciation is calculated, separating the components may result in the display of rounding errors. The components are shown rounded to the nearest cent, so they may sum to a slightly different result than is actually booked for depreciation.
Because of the more limited space available for a text report, the net (actually reported) ROU asset, accumulated depreciation, and depreciation expense are not shown. All amounts are shown on the spreadsheet report.
Net ROU Asset, Accum Depr, Depr Expense
The amounts shown on regular accounting reports.
Gross ROU Asset, Accum Depr, Depr Expense
The amounts that would be shown if there were no adjustments to the asset. The Gross ROU Asset is the
same as the initial liability for the lease, unless a different amount has been specified by the user.
Initial Direct Costs
As entered on the Inception tab. Added to the gross ROU asset.
Reflects the difference between life to date cash rent and life to date level rent expense for an operating lease. The deferred rent is non-zero if there is a balance at the time the lease transitions to ASC 842/IFRS 16/GASB 87. The deferred rent balance is the current liability (or asset) as of the end of the report period. The deferred rent period change is shown as the opposite sign to facilitate summing all activity amounts on the report.
This can be either positive or negative, when the initial setup of the asset should vary from the liability. This is most commonly used to account for business combinations, where a lease may be assigned an asset value as part of the purchase valuation that is not directly connected to the present value of the rents.