Lease incentive
For a lessee applying the IFRS 16 recognition model, lease incentives are reflected in the measurement of lease payments and the right-of-use asset under the relevant rules. Lessor accounting and the treatment of incentives depend on lease classification. Do not apply a generic straight-line operating-lease expense rule to every lessee lease; the recognition exemption or full lease model must be considered.
Worked example
A lessor pays a qualifying $5,000 incentive to a lessee when a lease begins. If received at or before commencement, the lessee deducts the incentive from the relevant lease-related initial right-of-use asset measurement under IFRS 16, assuming the standard’s conditions are met.
Common mistake
Treating every incentive as immediate revenue, or assuming it automatically removes the lessee’s lease liability.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |