4.11 Leases

With limited exceptions, ASC 842 requires lessees to recognize an ROU asset and a lease liability as of the lease commencement date, regardless of lease classification. The implementation guidance in ASC 842-20-55-10 clarifies that an ROU asset is a nonmonetary asset and a lease liability is a monetary liability. Therefore, when a lease is denominated in a foreign currency, the ROU asset must be remeasured in the functional currency by using the historical exchange rate (in a manner consistent with the remeasurement of PP&E purchased in a foreign currency, which is discussed in Section 4.10) and the lease liability must be remeasured by using the current exchange rate (in a manner consistent with the remeasurement of foreign-currency-denominated debt, which is discussed in Section 4.5). For additional discussion of the impact of foreign currencies on leases, including considerations related to the accounting for lease modifications, see Section 8.8.2 of Deloitte’s Roadmap Leases.