Lease rentals representing a recovery of material executory costs are to be treated by the lessor as:

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Lease rentals representing a recovery of material executory costs are to be treated by the lessor as revenue of the financial years in which the related costs were incurred. This is in accordance with the matching principle of accounting, which requires expenses to be matched with the related revenue generated in the same period. As lease rentals are a form of revenue for the lessor, the recovery of material executory costs should be recognized as revenue in the same period in which they were incurred.

Lease Rentals Representing a Recovery of Material Executory Costs Are