In one sentenceAn asset the lessee records representing its right to use the leased asset throughout the contract; it is usually depreciated over the shorter of the contract term and the useful life.
Simply put
You do not own the leased shop, but you own the right to use it for years, and this right has a value that is recorded as a non-current asset.
It starts at the amount of the initial lease liability plus any amounts paid in advance and direct costs, then decreases each year by depreciation.
Worked example
A business leased a warehouse for four years, and the right of use was recorded at 300,000 SAR.
Right of use at the start300,000
Contract term4 years
Carrying amount after one year = 300,000 − 75,000225,000
Annual depreciation = 300,000 ÷ 475,000 SAR
Don't confuse it with
LeasesThe right of use is the asset side of the contract, and it is matched by the lease liability on the liabilities side.