Ch8: Leases

Question 1

When a lease commences, the lessee recognizes an ROU (Right of Use) and a lease liability. What’s included in the ROU at cost?

Answer 1

• initial measurement of the lease liability.
• lease payment made at or before the commencement date, less any lease incentives.
• initial DCs incurred by the lessee.
• an estimate of costs to be incurred by the lessee at the termination of the lease to dismantle and remove the ROU asset or restore it to the condition required under the terms of the lease.