(paragraphs 29-35)

BC174 The IASB decided that, after the commencement date, a lessee should measure the right-of-use asset at cost less accumulated depreciation and accumulated impairment losses, adjusted for remeasurements of the lease liability (see paragraph BC192). Paragraphs BC41-BC56 include a detailed discussion of the feedback received on the lessee accounting model and the basis for the IASB’s decisions regarding the subsequent measurement of a lessee’s right-of-use asset.

BC175 The IASB did not adopt an alternative approach whereby a lessee would be required to measure the right-of-use asset at fair value after initial measurement, because this approach would be:

(a) inconsistent with the subsequent measurement of many other nonfinancial assets; and

(b) more complex and costly for entities to apply than a cost-based approach, because it requires the use of both current expected cash flows and current interest rates.

Impairment of the right-of-use asset (paragraph 33)