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Lease modification: 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 (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term).

Account for the lease modification as a termination of the original lease and creation of a new lease from the effective date of the modification. Measure the carrying amount of the underlying asset as the net investment in the original lease immediately before the effective date of the modification.

Per ASC 842-10-25-8, an entity shall account for a modification to a contract as a separate contract (that is, separate from the original contract) when both of the following conditions are present: The modification grants the lessee an additional right-of-use not included in the original lease.

Lease adjustment wizard Go to Asset leasing > Leases > Lease summary. Select the lease to adjust, and then select Adjustment wizard. Follow the prompts in the wizard to enter the required changes.

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.

Leases are capitalized when the business first obtains the right to control or use a leased asset. This is done by crediting the lease liability account for an amount equal to the present value of all remaining lease payments and debiting an ROU asset account for a corresponding amount.

On the lease commencement date, a lessee is required to measure and record a lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the lessee's incremental borrowing rate).

A lease can be a finance lease, an operating lease, a short-term lease, or a low-value lease. The system also calculates the net present value of future minimum lease payments for the purpose of valuation and classification.