CAF-6 · Chapter 3 · Question 4 of 15
At commencement, Titan Ltd recognizes a lease liability of Rs. 500,000. It also pays initial direct costs of Rs. 20,000 and receives a lease incentive of Rs. 5,000. What is the initial cost of the right-of-use asset?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 515,000
Explanation
The cost of the right-of-use asset includes the initial lease liability plus initial direct costs, less any lease incentives received. Calculation: 500,000 + 20,000 - 5,000 = Rs. 515,000.
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