When should an entity initially assess whether a contract is, or contains a lease?
The date the asset ships to the customer.
The date the supplier agrees to the terms.
The date contract negotiations begin.
The date of inception of the arrangement.
An entity should initially assess whether a contract is, or contains a lease, at the date of inception of the arrangement. This is when the contract is formed and the parties involved become obligated to the terms of the agreement.
