Remeasurement
Related terms
Category
ASC 842
Remeasurement is the recalculation of a lease liability and the corresponding adjustment to the right-of-use asset when certain events occur, such as a change in variable payments linked to an index or rate, a reassessment of options, or a lease modification. It updates balance sheet amounts to reflect current economic reality.
Why it matters
Remeasurement ensures that lease balances remain accurate throughout the lease term. A CPI-linked rent escalation, a decision to extend a lease, or a renegotiated payment schedule all change the economics of the lease. Without remeasurement, the balance sheet would carry stale liabilities and assets that do not reflect the organization's actual obligations.
How Arvexi handles this
Arvexi automatically triggers remeasurement when qualifying events are recorded. index updates, option reassessments, or modifications. The platform recalculates the lease liability using revised cash flows and the appropriate discount rate, adjusts the ROU asset, and generates the required journal entries.