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In this video tutorial, Sylvia from IFRSbox.com explains the basic method applied in lease accounting under the newest IFRS 16 standard. Using a simple example of car rental, she illustrates how the lessee recognizes the right of use asset and the lease liability at the commencement of the lease. The incremental borrowing rate is considered, and the right of use asset is calculated as the lease liability plus lease payments before or on the commencement date minus lease incentives and the lessee's initial costs.