Subsequent Measurement
Related terms
Category
ASC 842
Subsequent measurement refers to how lease liabilities and right-of-use assets are measured after initial recognition. The lease liability is reduced by payments and increased by interest accretion. The ROU asset is reduced by amortization (and impairment, if any). The pattern differs between finance leases and operating leases under ASC 842.
Why it matters
Subsequent measurement drives the journal entries recorded every period throughout the lease term. For finance leases, interest and amortization are recognized separately. producing front-loaded expense. For operating leases under ASC 842, a single straight-line lease expense is recognized. Getting subsequent measurement wrong compounds over time, creating growing misstatements that are difficult to unwind.
How Arvexi handles this
Arvexi generates complete amortization schedules at lease inception and produces periodic journal entries automatically. The platform handles both finance lease (separate interest + amortization) and operating lease (straight-line) subsequent measurement patterns, with schedules that update automatically on remeasurement or modification.