At the commencement of the lease,the amount recognised by the lessee for the asset and liability is measured as the:
A)higher of fair value and present value of minimum lease payments
B)lower of residual value and present value of minimum lease payments
C)lower of fair value and present value of minimum lease payments
D)none of the above

Question

Quizplus · Accepted Answer

At the commencement of the lease, the amount recognized by the lessee for the asset and liability is measured as the lower of fair value and the present value of minimum lease payments. This approach ensures that the lessee does not overstate the value of the leased asset or the associated liability on their balance sheet.

At the Commencement of the Lease,the Amount Recognised by the Lessee