IFRS 16 leases and impairment

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Hemantsingh1466
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Joined: 23 Dec 2022, 20:01

IFRS 16 leases and impairment

Post by Hemantsingh1466 »

Hi All!

I have a lease, whose ROU balance is Nil because of impairment.
But today I want to modify my lease liability due to early termination option exercised.

IFRS guides to reduce the lease liability and take the corresponding gain in profit and loss account, because no balance in ROU asset.

My question is can i first reverse the impairment on ROU asset equal to the modification in the lease liability and then for modification reduce the lease liability and ROU asset balance, since this treatment and the one prescribed in the standard both will have the net impact of reducing the lease liability and increasing the gain in profit and loss???
JRSB
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Re: IFRS 16 leases and impairment

Post by JRSB »

so in computing the lease liability in the first place, you had assumed you would not take the option to terminate? otherwise it'd be at zero at that point anyway
Hemantsingh1466
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Re: IFRS 16 leases and impairment

Post by Hemantsingh1466 »

Yes, at the time of initial recognition we were not reasonably certain that we will exercise the early termination option. But today we have exercised that option, hence modifying my LL.
JRSB
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Re: IFRS 16 leases and impairment

Post by JRSB »

Ok , in my view P&L then. Don't think the RoU asset is relevant in this.
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Marek Muc
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Re: IFRS 16 leases and impairment

Post by Marek Muc »

What was the reason you didn't shorten the lease term to account for the early termination option at the time you concluded that RoU asset should be written-off to nil?
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