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Administrator Guide
Last Updated: 2023-06-23
Reference: Accounting Methods for Lease-Type Supplier Contracts

Reference: Accounting Methods for Lease-Type Supplier Contracts

You can use 3 types of accounting methods in Workday to create your operating lease-type supplier contracts.
Accounting Method
Description
ROU Asset Depreciation Expense
Calculates and records interest expense accruals. Records depreciation expense of the ROU asset in the Business Asset Accounting functional area. Workday calculates ROU asset and lease liability using:
  • Initial direct costs.
  • Interest rate.
  • Lease payment amounts.
  • Lessor incentives.
  • Payment frequency.
  • Prepaid lease payment.
ROU Asset Operating Expense
Calculates and records lease expense accruals and interest accretion. Workday calculates ROU asset and lease liability using:
  • Initial direct costs.
  • Interest rate.
  • Lease payment amounts.
  • Lessor incentives.
  • Payment frequency.
  • Prepaid lease payment.
Straight Line Expense
Calculates and records lease expense accruals. Workday doesn't record a ROU asset or lease liability as of the contract start date.