What is the initial measurement entry under ASPE 3065 for a lease?

What is the initial measurement entry under ASPE 3065 for a lease?

• A. Dr Cash; Cr Asset under lease
• B. Dr Asset under lease; Cr Lease Liability (FV - lease payment)
• C. Dr Lease Liability; Cr Cash
• D. Dr Asset under lease; Cr Lease Liability (FV - lease payment); Cr Cash (lease payment)

Answer: (D)

Under ASPE 3065, when a lease is accounted for as a finance lease, the lessee records a lease asset and a lease liability at inception. The asset is recognized at the total cost to acquire the right to use the asset (often the present value of minimum lease payments plus any up‑front payments or direct costs), while the liability is recognized at the present value of the minimum lease payments. If there is an upfront lease payment, that cash outflow is reflected too. The correct initial entry captures all of this: the asset under lease is debited for the total amount, the lease liability is credited for the present value of the minimum lease payments, and the cash paid at the start is credited as well. This mirrors the economic realities at the moment the lease begins: you acquire a right‑to‑use asset and incur a corresponding obligation, funded in part by an immediate cash payment. If there were no upfront payment, you would still recognize the asset and the lease liability for the present value of the minimum lease payments, but there would be no cash credit.

Under ASPE 3065, when a lease is accounted for as a finance lease, the lessee records a lease asset and a lease liability at inception. The asset is recognized at the total cost to acquire the right to use the asset (often the present value of minimum lease payments plus any up‑front payments or direct costs), while the liability is recognized at the present value of the minimum lease payments. If there is an upfront lease payment, that cash outflow is reflected too.

The correct initial entry captures all of this: the asset under lease is debited for the total amount, the lease liability is credited for the present value of the minimum lease payments, and the cash paid at the start is credited as well. This mirrors the economic realities at the moment the lease begins: you acquire a right‑to‑use asset and incur a corresponding obligation, funded in part by an immediate cash payment.

If there were no upfront payment, you would still recognize the asset and the lease liability for the present value of the minimum lease payments, but there would be no cash credit.