CERTYNEX IFRS ACADEMY

Lamivert leases for 10 years land on which it operates a concrete batching plant; the concrete produced is sold as inventory. The lease requires it to restore the ground damaged by the activity: each year of production creates a new restoration obligation. How should the restoration costs incurred in 20X2 as a result of that year's production be treated?

Add them retrospectively to the cost of the right-of-use asset at the commencement date.

Account for them under IAS 2, with the obligation recognised and measured under IAS 37.

Recognise nothing until the end of the lease, when the restoration takes place.

Include them in the lease liability as variable lease payments.