What initial direct costs should be included in the valuation of the right-of-use (ROU) asset?

The correct answer focuses on the costs that are directly attributable to the execution of the lease. When accounting for a right-of-use (ROU) asset, initial direct costs are those expenses that are necessary to initiate a lease agreement and are incurred as a direct result of executing the lease. This includes items such as commissions paid to agents for negotiating the lease, legal fees related to the lease agreement, and other costs that are directly tied to the initiation of that lease.

Including only these costs ensures that the valuation of the ROU asset reflects expenses that are specifically linked to obtaining the right to use the underlying asset, rather than general or unrelated expenses. This specificity is essential for accurate financial reporting and ensures that the asset is recognized at an appropriate initial value, which impacts the asset’s subsequent depreciation or amortization.

Costs incurred before lease signing and those related to due diligence would not be included in the valuation of the ROU asset because they do not directly relate to the execution of the lease. Maintenance costs, while important for overall asset management, are not initial direct costs incurred at the lease's commencement and rather fall under ongoing operational expenses.