AASB 16 Leases 22-25,Aus25.1-Aus25.2: At commencement recognise, at cost, a right-of-use asset (lease liability plus prepaid payments net of incentives, initial direct costs and restoration estimates) and a lease liability, with the not-for-profit fair value election for below-market leases

What does 22-25,Aus25.1-Aus25.2 require?

On the commencement date the lessee records both a right-of-use asset and the matching lease liability. The asset's cost is the initial lease liability, plus payments made at or before commencement less incentives received, plus the lessee's initial direct costs, plus the estimated cost of dismantling, removing and restoring the asset or its site as required by the lease, recognised when the obligation arises and measured under AASB 137, unless the costs are incurred to produce inventories, in which case AASB 102 applies. A not-for-profit lessee may elect, class by class, to measure right-of-use assets under leases with significantly below-market terms, granted principally so it can further its objectives, at fair value under AASB 13 at initial recognition, with AASB 1058 governing the related amounts, and may treat those assets as a separate class even though their nature and use resemble other right-of-use assets, an approach not to be extended by analogy to other assets.