Expand Currency Lease For Free

According 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.

IFRS 16 defines a lease modification as ?a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease.? A lease modification results from renegotiations between the lessee and lessor.

The agreement to extend the lease is a modification because it was not contemplated in the original terms of the lease. Since the modification does not add the right to use one or more underlying assets, it does not meet the criteria in IFRS 16.44(a) to be accounted for as a separate lease.

A lease modification is a change to the terms and conditions of a contract resulting in a change to either the scope or consideration for a lease. This could be a change that either adds or terminates the right to use a portion or all of the underlying asset(s) or changes the lease term.

Variable lease payments depending on the future sales or use of the asset. Well, under the definitions in IFRS 16, the payments NOT depending on the rate or index DO NOT enter into your lease payments. In other words they are excluded. Instead, they are recognized in profit or loss when incurred.

3 Remeasurement of lease liability. A lease liability should be remeasured on the effective date of the reassessment event or modification (the date that the modification is approved by both the lessee and lessor) as if the lease were a new lease that commences on that date.

The two criteria are: The modification grants the lessee an additional right-of-use not specified in the original lease (for example, the right to use additional assets or additional floors/space in a building)