IFRS 16Chapter 6Lesson 2
Lessee at the commencement date (2): the cost of the right-of-use asset
Step 1 of 8Learning objectives
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The right-of-use asset is measured at cost: the initial lease liability, plus payments made in advance (less lease incentives received), initial direct costs and restoration costs required by the lease. The lesson completes the Transvia example and records the final opening entry.
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Learning objectives
- List the four components of the cost of the right-of-use asset and the direction (addition or deduction) of each.
- Distinguish the incentive received (deducted from the cost of the asset) from the incentive receivable (deducted from the payments in the liability).
- Account for a restoration obligation required by the lease (IAS 37, inventory case under IAS 2).
- Calculate the cost of the right-of-use asset and record the full entry at the commencement date.