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how do you treat cost prior to the execution of a lease?


My organisation is about to enter a lease arrangement with the authority to possesss some land. Some costs are being incurred as PR to seal the arrangement. can i capitalise such costs?

asked May 8, 2014 in IAS 17 - Leases by anonymous

1 Answer

0 votes
According to IAS-17 any incentive for new or renewal of operating lease by lessee should be recognized a reduction of the rental expenses irrespective of the incentive's nature.
In light of above paragraph lessee cannot capitalize cost. However, accounting with the perspective of lessor will be totally different. Under 2003, IAS-17 revision, initial direct cost incurred by lessor must be capitalized over the lease term. They may no longer be charged to profit and loss when incurred.
answered Nov 7 by Maher Ali Level 2 Member (4,360 points)


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