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Scope
the contingency is resolved. This may lead to the recognition of an initial loss by the lessor (even if the
overall arrangement is expected to be profitable). The discount rate used to record a lease receivable
cannot be less than zero. As such, a lessor would not be permitted to use a rate less than zero to avoid
recognition of an initial loss.
See Examples 2-15, Example 2-16 and Example 2-17 for an illustration of these concepts.
Figure 2-6 illustrates the decision process for the allocation of variable consideration for lessors.
Figure 2-6
Lessor allocation of variable consideration
2-34
