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Hi Sir,
In the tuition note Chp12 Lease- Example 2
Why the B/F Lease liability figure for year 1 ($22730) doesn’t need to deduct the Incentives $500?
On the table of p.48 for Lessee Accounting Initial recognition, the Lease liability part states “Fixed payments less incentives”? Is there a conflict with the example answer?Thanks.
The $500 is a cash receipt from the lessor and does not impact the value of the lease liability.
Thanks
Hi Sir, so the 500 reimburse is not Incentive? why it can’t be incentive? How to recognise “Incentive”?
The incentive has been recorded within the value of the right of use asset. Have you looked at the answer at the back of the notes? You should see the 500 being deducted in the calculation of the right of use asset.
Thanks
Hi Sir,
Thanks for the reply. I understand in working 1 – Right of Asset. The incentive has been deducted (22730+1000-500). That’s no problem at all. However what I’m confused is working 2- Lease Liability. the B/F figure is 22730, which doesn’t less the incentive 500.On the table of p.48 for Lessee Accounting Initial recognition, the Lease liability part states “Fixed payments less incentives”. So I think the Lease Liability B/F figure should be “22730 Fixed payments -500 Incentive” instead of “22730”?
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