Question

Suppose Nash received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected

Answer 1

The Lease liability will not be affected.

The $5,000 has to be included in the Right of Use Asset

Step-by-step explanation:

Initial Measurement

Lease Liability : Measured as Present Value of Contract payments which incur from commencement date

Right of Use Asset : Measured at Amount Initially measured for Lease Liability add lease payments at and before commencement date

Thus,

The Lease liability will not be affected.

The $5,000 has to be included in the Right of Use Asset