Question
.A lessee enters into a five-year lease of a building which has a remaining useful life of ten years at 01 Jan 20x9. Lease payments
.A lessee enters into a five-year lease of a building which has a remaining useful life of ten years at 01 Jan 20x9. Lease payments are $46,000 per annum, payable at the beginning of each year. The lessee incurs initial direct costs of $14,000 and receives lease incentives of $4,000. There is no transfer of the asset at the end of the lease and no purchase option. The interest rate implicit in the lease is not immediately determinable but the lessees incremental borrowing rate is 7%. At the commencement date the lessee pays the initial $46,000, incurs the direct costs and receives the lease incentives. Calculate Right-of-use asset and lease liability as of 31 December 2019.
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