1
Q
What are the 5 items which are recognised/affect the initial measurement of the right-of-use assets?
(IFRS 16 Leases)
A
- The initial measurement of the lease liability
- Lease payments made at or before the commencement dates
- Any lease incentives received are deducted
- Initial direct costs incurred by the lease
- Estimate costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying to a condition in line with the lease terms
2
Q
How do you depreciate leases (that are capitalised)?
A
You depreciate it by taking the initial cost measurement (which includes the 5 affecting factors) and divide it by:
the shorter of
- lease term
Or
- the asset’s useful life
UNLESS: the legal ownership is to be transfered at the end of the lease, and then it will be depreciate over the asset’s useful life
