Hi everyone,
I I have one question relates to intial direct cost incurred by lessor under IFRS 16. Do we capitalize intial direct cost into the finance lease receivable at initial recognition? Subsequently, do we amortize initial direct cost over lease term?
Please help to answer and provide source of answer if any.
Thanks all!
I believe is capitalized into lease receivable Subsequent measurement Dr cash Cr receivable Cr finance income
Any objective evidence existed, credit loss should be provided during the year
Initial direct cost is put inside right-of-use asset of lessee
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. The interest rate implicit in the lease is defined in such a way that the initial direct costs are included automatically in the net investment in the lease; there is no need to add them separately.
It seems like need to deduct lease receivable , so as the income recognized will reduced over lease term
Not really sure , because standard didn’t use the word “capitalized”. They use “included”
