alleryStart learning →For a non-dealer lessor, initial direct costs on a finance lease are:
Aincluded within net investment
Bexpensed as they arise
Cadded to the lessee's asset
Ddeferred as a separate asset
Answer & Solution
Correct answer: A. included within net investment
The implicit rate is defined so that these costs fall inside the net investment without separate addition.
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Related questions
Ind AS 116 applies to annual reporting periods beginning on or after:At transition, a practical expedient lets an entity avoid reassessing:Modified retrospective adoption: the cumulative effect goes to:Asset worth Rs 5,00,000 sold for Rs 4,60,000 in leaseback at market rent. Rs 40,000 shortfSame sale-leaseback: total gain is Rs 2,00,000 and the retained right is 25% of fair valueSale-leaseback: carrying Rs 4,00,000; fair value Rs 6,00,000; PV of market lease payments A sale and leaseback transfer fails the sale test. The seller-lessee:In a sale and leaseback, whether the transfer is a sale is decided using: