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Hi, having a bit of trouble with this. For payments in advance the initial lease liability is the same as the right of use asset and for arrears the initial lease liability is only the PV of the future lease payments?
No, the lease liability and right-of-use asset are not always the same and it depends on if there are any additional items to include on the right-of-use asset. So, there could be additional things such as any direct costs or costs of dismantling to add on to the ROU asset.
For the purpose of this exam however, you are most likely to see the ROU and lease liability amounts being the same, i.e. at the present value of the lease payments.
Thanks
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