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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Variable lease payment
Sir,for June 2019 Examiner report for Q1 part (c),extract:
“Many candidates recognised that the right-of-use asset would be significantly undervalued on initial recognition but few stated that the higher than anticipated increase in the consumer price index should not be adjusted for, as index linked variable payments are only adjusted for when there is a subsequent change to the actual payments on the lease”
Is it means as at inception the right of use asset (and lease payment) do not adjust for the anticipated change in index rate but only adjust when its actual change in index rate in a later year?
Thank you.
That’s correct.