Page 144 - F2 Integrated Workbook STUDENT 2019

Chapter 6

Lessee accounting

2.1 Initial recognition

At inception
of lease,
recognise

Right-of-use
Lease liability
asset

Present value of lease Cost
payments not yet made
which includes:
which includes:
 Initial value of lease liability
 Fixed payments PLUS

 Variable payments (valued  Payments made at or before
as at inception) commencement

 Options to purchase that are  Initial direct costs
expected to be exercised

 Estimated costs of asset
 Termination penalties if removal or dismantling as
expected to be paid. per lease conditions.

The discount rate used to discount the liability will be the rate implicit in the
lease.

If this is not obtainable, use the rate of incremental borrowing.

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