initial direct cost in lease

[zia ahmad]

AOA.

i want to know abt intial direct cost in lease.
i know that initial direct incurred by lessee will
include in amount of leased asset recognized in lessee
balance sheet.

but whats about if initial direct cost incurred by lessor??
and whats about if initial direct cost incurred by
(Maufacturer and dealer lessor).

kindly give me guidence

regards

[wsafca]

First i want to make you one think clear. in this standard most of the words has two definitions.

one from the view point of lessee. To explain how the lessee account for the lease

and from the viewpoint of lessor. To explain how the lesser should account for the lease.

Initial direct cost for the lessee means

costs directly attributable to negotiating and arranging a lease paid by the lessee.

[wsafca]

What are the initial direct costs related to Lessors?

Same

costs directly attributable to negotiating and arranging a lease paid by the <u>lessor.</u>


But if the lessor is the manufacturer of the leased asset or he deals in same asset as his principal business, the this cost is expensed out and not formed partof his asset (finance lease debtor).