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Initial Direct Costs – Operating Lease – Lessor

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Initial Direct Costs – Operating Lease – Lessor

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • November 12, 2024 at 10:25 pm #713209
    Junipear
    Participant
    • Topics: 3
    • Replies: 0
    • ☆

    Hello,

    IFRS 16 para 83 states “A lessor shall add initial direct costs incurred in obtaining an operating lease
    to the carrying amount of the underlying asset and recognise those costs as an expense over the lease term on the same basis as the lease income.”

    How does that look as a journal entry? Do you debit it to the asset or is it a new account underneath the asset?

    e.g.
    Dr PPE = $500
    Cr Cash = $500
    Recognition of initial direct costs of negotiating the lease

    OR

    Dr Deferred Initial Direct Costs – PPE = $500
    Cr Cash = $500

    November 17, 2024 at 8:50 pm #713297
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7207
    • ☆☆☆☆☆

    Hi,

    Lessor accounting is not on the FR paper, so please post the query on the SBR forum for your answer.

    Thanks

  • Author
    Posts
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