Inception of the Lease is defined as

• A. The date the lessee signs the lease.
• B. The date the lease payments begin.
• C. The date lease commitment occurs.
• D. The date the asset is delivered to the lessee.

Answer: (C)

Inception is the moment the lease becomes binding and identifiable for accounting—the date the parties commit to the lease terms and the arrangement is enforceable. It marks when the lessee has the right to the identified asset under the agreed terms, even if the asset isn’t delivered yet or rent payments haven’t started. That’s why the inception date is the date the lease commitment occurs, not the signing date, the start of payments, or the delivery date. For example, if a lease is signed today but delivery and payment start later, the inception is the commitment date when the terms are binding.