On 1 January 2014, Lystra entered into a lease agreement with Trina to rent an asset for a 6 year period, at which point, it will be returned to the lessor and scrapped. The annual payments of $18,420, made in advance. The initial measurement of the lease liability amounts to $84,000, discounted at the implicit interest rate shown in the lease agreement of 12.5%. Lystra has the right to determine the use of the asset during the lease term and will obtain substantially all the economic benefit from its use. Required 1. According to IFRS 16, How should the right of use and lease
On 1 January 2014, Lystra entered into a lease agreement with Trina to rent an asset for a 6 year period, at which point, it will be returned to the lessor and scrapped. The annual payments of $18,420, made in advance. The initial measurement of the lease liability amounts to $84,000, discounted at the implicit interest rate shown in the lease agreement of 12.5%. Lystra has the right to determine the use of the asset during the lease term and will obtain substantially all the economic benefit from its use.
Required
1. According to IFRS 16, How should the right of use and lease liability be measured initially? And what discount rate should be used for the present value of the minimum lease payments?
2. How should the right of use of a leased asset be
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