--- title: What is the Calculation to Subsequently Measure Finance Leases? description: For finance leases, ROU Asset Amortization and Interest Expense are recorded separately on the income statement. Finance leases will generally have a front-loaded expense recognition.  ROU Asset Amort --- [Skip to content](https://help.occupier.com/knowledge/what-is-the-calculation-to-subsequently-measure-finance-leases#main-content) English Show submenu for translations [Customer portal](https://help.occupier.com/tickets-view?hsLang=en) ![H-Teal (1).svg\]](https://help.occupier.com/hubfs/H-Teal%20(1).svg) - [Tickets](https://3455891.hs-sites.com/tickets-view) - [Sign out](https://3455891.hs-sites.com/_hcms/mem/logout) Open main navigation Close main navigation - [Tickets](https://3455891.hs-sites.com/tickets-view) - [Sign out](https://3455891.hs-sites.com/_hcms/mem/logout) - English Show submenu for translations - [Customer portal](https://help.occupier.com/tickets-view) Hi there! How can we help? - There are no suggestions because the search field is empty. 1. [Help Center](https://help.occupier.com/knowledge?hsLang=en) 2. [Lease Accounting](https://help.occupier.com/knowledge/lease-accounting?hsLang=en) 3. [Understanding ASC 842, IFRS16, GASB87 and FRS102](https://help.occupier.com/knowledge/lease-accounting?hsLang=en#understanding-asc-842-ifrs16-gasb87-and-frs102) # What is the Calculation to Subsequently Measure Finance Leases? For finance leases, [ROU Asset](https://www.occupier.com/blog/asc-842-lease-accounting-glossary/) Amortization and Interest Expense are recorded separately on the income statement. Finance leases will generally have a front-loaded expense recognition.  **ROU Asset Amortization** A lessee shall amortize the ROU asset on a straight-line basis, unless another systematic basis is more representative of the pattern in which the lessee expects to consume the right-of-use asset’s future economic benefits.  A lessee shall amortize the ROU asset from the [lease commencement date](https://www.occupier.com/blog/asc-842-lease-accounting-glossary/) to the earlier of the end of the [useful life](https://www.occupier.com/blog/asc-842-lease-accounting-glossary/) of the ROU asset or the end of the lease term. However, if the lease transfers ownership of the underlying asset to the lessee or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the ROU asset to the end of the useful life of the underlying asset. **Interest Expense** Period Interest Expense is calculated as follows: Beginning Lease Liability x Period Discount Rate = Period Interest Expense  **Lease Liability** Lease liabilities are measured the same way regardless of lease classification. In each period, the liability will reflect an increase due to period interest expense which is offset by a period lease payment, as shown below: Beginning Lease Liability + Period Interest Expense - Period Lease Payment = Ending Lease Liability **Accounting Guidance Referenced:** - ASC 842-20-25-5 - ASC 842-20-35-1 - ASC 842-20-35-7 - ASC 842-35-8  - Deloitte *A Roadmap to Applying the New Leasing Standard (2020) *8.4.3.1 - PwC *Leases October 2020* 4.4.1   - [Getting Started](https://help.occupier.com/knowledge/getting-started?hsLang=en#main-content) - [The Basics](https://help.occupier.com/knowledge/getting-started?hsLang=en#the-basics) - [Occupier Onboarding & Abstraction](https://help.occupier.com/knowledge/getting-started?hsLang=en#occupier-onboarding-abstraction) - [User & Team Management](https://help.occupier.com/knowledge/getting-started?hsLang=en#user-team-management) - [Email & Notification Management](https://help.occupier.com/knowledge/getting-started?hsLang=en#email-notification-management) - 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