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Lease fee adjustment means the department application of the rental rate contracted in the lease to the most recent appraised market value to determine if it is necessary to alter the annual rental payment. The adjustment will occur at the review period defined in the lease.

Reassessments are required when an event does not involve renegotiating the lease terms and conditions, but when facts, assumptions, or other circumstances change. For example, a lessee may change their decision about exercising an option within a lease.

A lease modification results in a continuation of the existing lease if it does not result in a separate lease and it does not change the classification of the lease. In this case, the lessee remeasures the lease liability using a revised discount rate and adjusts the right-of-use asset by the same amount.

Effective date of a lease modification This is the date when both parties agree to the lease modification and is usually the date when the modified contract is signed. For modifications that are not accounted for as separate leases, the lease liability and right-of- use asset are remeasured at this date.

A modification of lease, also called a lease amendment or lease modification, is an agreement that formally changes the original terms and conditions of a lease. It allows the parties to agree to changes without having to sign an entirely new lease.

Ing to the IFRS 16, A re-assessment of the lease liability takes place if the cash flows change based on the original terms and conditions of the lease. Changes that were not part of the original terms and conditions of the lease would be considered as lease modifications.

Lease modifications can change a lease so drastically in scope or consideration that the modification creates a new lease. Under ASC 842, two criteria must be met to result in a separate contract: Modification grants additional rights of use (i.e. additional floors or square footage in the building)

The adjustment for operating leases is normally performed on balance sheet items such as debt and fixed assets, income statement items such as EBITDA and EBIT, and cash flow items such as FFO, NOCF, and FCF.