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What is the initial measurement of the right-of-use asset

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Reference no: EM132564013

Black Ltd enters into a 8-year lease on 1 January 20X6. Black Ltd incurred the following costs in respect of the lease:

(1) a lease incentive received by Black Ltd from the building's owners of £6,000 as the building had remained vacant for a period prior to Black Ltd taking on the lease.

(2) £20,000 deposit made at the commencement date of 1 January 20X6

(3) £3,000 legal fees

Payments of the lease are £125,000 pa in advance, with the first payment commencing on 1 January 20X6. The interest rate implicit in the lease is 5%, and the discounted future cashflows of the lease, excluding the deposit, is £1,000,000. There is no option to purchase the building at the end of the lease.

Question:

Question (a) Describe the definition of right-of-use asset.

Question (b) What is theinitial measurement of the right-of-use asset at 1 January 20X6?

Question (c) What is the brought forward lease liability at 1 January 20X7?

Reference no: EM132564013

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