About IFRS 16.69 Initial Direct Cost Lessor Accounting for Finance Lease
Posted: 22 May 2022, 16:22
Dear SIr/Madam,
I would like to consult about the meaning and application in IFRS 16.69:
"Initial direct costs, other than those incurred by manufacturer or dealer lessors, are included in the initial measurement of the net investment in the lease and reduce the amount of income recognised over the lease term."
I read that on IFRS Community notes suggest that such Initial Indirect Costs should be "Capitalised" & included in the initial measurement of the "Net Investment" & Reduce the amount of lease income recognised over the lease term.
Therefore, I should NOT Expense such costs but Capitalise them as "Net Investment" (asset) (by adding such costs into the calculation of Net Investment, right?
If so, such costs will be "amortised" over the lease term when the lessee pays?
Thanks very much for your answer! Really appreciate it!
Alvin
I would like to consult about the meaning and application in IFRS 16.69:
"Initial direct costs, other than those incurred by manufacturer or dealer lessors, are included in the initial measurement of the net investment in the lease and reduce the amount of income recognised over the lease term."
I read that on IFRS Community notes suggest that such Initial Indirect Costs should be "Capitalised" & included in the initial measurement of the "Net Investment" & Reduce the amount of lease income recognised over the lease term.
Therefore, I should NOT Expense such costs but Capitalise them as "Net Investment" (asset) (by adding such costs into the calculation of Net Investment, right?
If so, such costs will be "amortised" over the lease term when the lessee pays?
Thanks very much for your answer! Really appreciate it!
Alvin