Low-Value Asset Exemption
Related terms
Category
ASC 842
The low-value asset exemption allows lessees to exclude leases of low-value underlying assets from balance sheet recognition. IFRS 16 sets the threshold at approximately $5,000 when the asset is new. ASC 842 does not provide a specific low-value exemption. US GAAP uses the short-term lease exemption instead.
Why it matters
The low-value asset exemption reduces compliance burden for immaterial leases. office printers, laptops, small furniture. Without it, every $200/month printer lease would require balance sheet recognition, ROU asset calculation, and amortization schedules. The exemption applies on a lease-by-lease basis, so organizations must still identify and classify these leases even if they elect not to capitalize them.
How Arvexi handles this
Arvexi flags leases that qualify for the low-value exemption during extraction and classification. The platform tracks exempt leases separately for disclosure purposes. IFRS 16 requires quantitative disclosure of expenses from low-value leases even when they are not recognized on the balance sheet.