How do I account for Right of Use (ROU) Assets in Clubtreasurer?

A Right-of-Use (ROU) asset is the value of your right to use something you’re leasing — like an office, a van, or equipment — for a set period of time.

Under accounting rules (IFRS 16 / FRS 102):

• When you sign a lease, you don’t just record rent expenses anymore.

• Instead, you record:

  • a ROU Asset — the economic benefit of using that leased item, and

  • a Lease Liability — what you owe in future lease payments.

Then, over time:

• You depreciate the ROU asset (like a normal fixed asset), and

• You recognise interest on the lease liability.

In Clubtreasurer, you can account for ROU assets using a combination of Fixed Assets and  "Long-Term Loan" Accounts. Here is a worked example which demonstrates how this can be done.

1. Create a new Account for the asset's Lease Liability -> Nav: Account Balances > New Account > Type = LONG TERM LOAN.

2. Create a new Asset Category for your ROU asset - Nav: Setup > Asset Categories > Add Row button 

3. Create a new Fixed Asset for your ROU:
    
   • Flag to Track as a Financial Asset  / Select your Depreciation method (Straight Line over Lease term) / do not enter an Opening Balance -> Click Create Asset button
   • Click the Initial Capital Purchase button -> Account = Lease Liability A/c (created in step 1)  / Cost Code = Select a CAPEX Cost Code (NB you may need to create a CAPEX code if you dont have any)  / Amount = PV of the Lease Value (ie. the total of your lease repayments discounted by the lease interest rate). 
      
     => This creates the Fixed Asset and Lease Liability in your Balance Sheet, and the Depreciation Charges in your P&L

4. Record your (annual) Lease Interest expenses as Payment Transactions -> Account = Lease Liability Account / Cost Code = 'Lease Interest Charges' (you may need to create a new Payment Code Code => This will add the interest payment charge to your P&L and increase the Lease Liability.
    
5. Record the (annual) Lease Payments as Account Transfers ->  From Account = your Bank Account  / To Account = Lease Liability Account => This records the cash payment made and reduces the Lease Liability balance value. This only effects your Balance Sheet.

In summary:

• The ROU Asset is depreciated straight-line (over the lease term).

• The Lease Liability reduces as payments are made.

• The P&L charge starts higher (interest + depreciation) and declines over time.

• This approach ensures the lease is shown on your balance sheet