Weighted Average Remaining Lease Term
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Category
Financial Reporting
The weighted average remaining lease term is a disclosure metric required by ASC 842 that represents the average remaining lease term across a portfolio, weighted by the lease liability balance of each lease. It is reported separately for operating and finance leases.
Why it matters
This metric is a required quantitative disclosure under ASC 842 and provides investors and analysts with insight into the overall duration profile of a company's lease portfolio. A longer weighted average term suggests more committed obligations, while a shorter term indicates more near-term flexibility.
The calculation weights each lease's remaining term by its lease liability balance, so larger leases have proportionally more influence on the average. This disclosure is required in both annual and interim financial statements.
How Arvexi handles this
Arvexi calculates the weighted average remaining lease term automatically across your portfolio, separated by operating and finance lease classifications. The metric updates in real time as leases commence, modify, or expire, and is included in the platform's ASC 842 disclosure outputs.