Why ROU Asset Depreciation Checks Fail When Schedule And Journal Logic Drift

Adam Benn Posted on May 31 Why ROU Asset Depreciation Checks Fail When Schedule And Journal Logic Drift # productivity The depreciation problem usually gets reported as a journal problem. Someone sees a depreciation expense that looks off. The export no longer ties cleanly. The journal layer gets blamed first. In practice, the bug is usually upstream by the time anyone opens the journal tab. Most IFRS 16 depreciation failures are drift failures. The schedule still looks plausible. The closing ROU asset is still in the right ballpark. What broke was one of the connections underneath it: the liability was remeasured and the ROU asset changed, but the depreciation profile stayed on the old run the period boundaries changed, but the model still spread depreciation as though every future slice were identical the schedule and the journals were no longer sourcing the same values someone edited history and the downstream outputs stopped agreeing If you want a quick live reference point, start with the IFRS 16 calculator . The supported workflow exposes the ROU schedule and journal outputs separately, which makes this class of drift easier to spot. The formula is rarely the real failure At a whiteboard, ROU depreciation looks uncomplicated. The asset is recognised at commencement. Then it is depreciated through time. In the common straight-line case, the carrying amount is spread across the remaining depreciation horizon. That description is true, but it skips the parts that usually fail in code. The implementation problem is not "can we divide by the number of periods?" It is "what exactly is the carrying amount at this boundary, what periods are still left, and what event has already changed the asset before we calculate the next charge?" That is why the public IFRS 16 calculation guide separates the ROU asset side from the liability side. The lease liability unwinds through interest and payment logic. The ROU asset follows carrying amount and depreciation logic. They inte