Based on the 2025 Franchise Disclosure Document, Batteries Plus Bulbs recognizes right-of-use (ROU) assets and lease liabilities related to leases on the company's consolidated balance sheets, following ASC Topic 842, Leases. The company determines if an arrangement is or contains a lease at its inception. ROU assets represent the right to use an underlying asset for the lease term, while lease liabilities reflect the obligation to make lease payments arising from the lease.

During the lease term, the lease liability represents the present value of the remaining lease payments. The ROU asset is measured at the amount of the lease liability, adjusted for prepaid rent, unamortized initial direct costs, and the remaining balance of lease incentives received. At the end of the lease, both the lease ROU asset and liability are reduced to zero.

This accounting treatment means that Batteries Plus Bulbs accounts for its leases by initially recognizing an asset and a liability on its balance sheet. The asset represents the right to use the leased property, and the liability represents the obligation to make lease payments. These values are adjusted over the lease term to reflect factors like prepaid rent or lease incentives. This approach provides a transparent view of the company's lease obligations and leased assets on its financial statements.