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Hi there, thank you for all amazing lectures , really appreciate it!
Bit confused with lease liabilities and when they pay an initial deposit.
If we working out ROU asset then you can add deposit to lease liability amount (present value), but when calc the lease liability, if it says in the Q, on 1/1/12 PV of future lease payments was 20,000, but on the same date they paid a deposit of say 2,000, when i start my lease L calc, I’m confused as to whether i should start with say 18,000 or start with b/f as 20,000? I’ve seen a couple of questions of this kaplan exam kit and i feel one deducted the 2k and another question they didn’t?
Is it to do with the wording of the question, but it keeps tripping me up.I hope i made this make sense.
Thank you soo much in advance
Martin
Martin – I think you mean to be asking on the FR forum – IFRS 16 is not an examinable document for AA. I think perhaps you are confusing the cost of the ROU asset and the lease liability – they are not the same amount. The lease liability is just one for components of the cost of the ROU asset. Any down-payment/deposit and similarly direct costs are also part of the cost of the ROU – but they are not part of the lease liability. Similarly, any provision to “decommission” the ROU asset would be added to its cost (if it meets the definition of a provision per IAS 37) – but, again, that has nothing to do with the lease liability. Hope that helps.
Sorry yes i meant to post this on FR ask the tutor, my apologies, been a busy few days with work and study. Thank you for your response though
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