Misconception · MIS:incremental-borrowing-rate-is-always-first-choice

Mistaken idea “The incremental borrowing rate is always the first choice”

Mistaken reasoning: This mistake ignores a readily determinable implicit rate and entity specific election requirements.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

Use the implicit rate when readily determinable. Otherwise document the incremental borrowing rate or an eligible class-level risk-free election.

Where to watch

When this mistake may appear

  • A lessee schedule needs a discount rate.
Check your work

Your work may contain this mistake if:

  • Use a generic borrowing rate without documenting implicit-rate availability or permitted policy elections.