CAF-6 · Chapter 3 · Question 12 of 15
At the end of a 4-year lease, a company pays a penalty of Rs. 50,000 because it chose to terminate the lease early as allowed in the contract. If this was expected at commencement, the penalty should have been:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Included in the initial measurement of the lease liability.
Explanation
Lease payments include payments of penalties for terminating the lease if the lease term reflects the lessee exercising an option to terminate.
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