based on the answer to question 6 explain why the investment increases in value when 613213

An entity agrees to enter into a new lease arrangement with a new lessor. As an incentive for entering into the new lease, the lessor agrees to pay the lessee’s relocation costs. The lessee’s moving costs are €1,000. The new lease has a term of 10 years, at a fixed rate of €2,000 per year.

The lessee recognises relocation costs of €1,000 as an expense in Year 1. Both the lessor and lessee would recognise the net rental consideration of €19,000 (€2,000 for each of the 10 years in the lease term, less the €1,000 incentive) over the 10 year lease term using a single amortisation method in accordance with SIC-15.