Rent Expense

Rent expense for operating leases is bifurcated into two components:

• Amortization of Right-of-Use Asset: Uses a fixed rate associated with the amortization of the right-of-use asset.

  The accounts associated with this component should not be revalued in PeopleSoft General Ledger.

• Interest: Calculates interest for right-of-use assets and uses a conversion rate at month end.

  The accounts associated with this component should be revalued in PeopleSoft General Ledger.

Straight-line adjustments provide an equal pattern of expense recognition over the life of the lease when lease payment amounts change over time and use the currency conversion rate associated with amortization of the right-of-use asset.