IFRS 16 - Payments including a fixed yearly escalation

[martinelkhoury]

Hi there,

Is there a previous topic discussing IFRS 16 leases with fixed payments, but that increase by a fixed known percentage every year?
If no, could you please help on the way of calculation?
Supposedly we have a real estate rent for 5 years with payment of 10,000$ that increases by 5% every year and a discount rate of 10%
Should we consider the present value at t=0 considering payment at Y1=10,000 Y2= 10,500 Y3=11,025 etc...
If so, then how will we construct the schedule for Lease liability and interest expense if the payments are not equal?

Or should I compute PV considering all payments as 10,000 then in year 2 I do re-measurement (using all future payments as 10,500)? And re-measure every year thereafter?

Your help is highly appreciated
Thank you in advance,
Martine

[Marek Muc]

Hi, you need to include increasing payments on day 1. See the section below :

https://ifrscommunity.com/knowledge-bas ... e-payments

[martinelkhoury]

Thank you Marek from your prompt response.
Do you think I can find an example of the calculaion like the excels posted on the forum??
Thanks again

[Marek Muc]

Sure, there are excel examples available for download in the knowledge base, you can use them for your case, just use your actual payments , dates etc.

[martinelkhoury]

thanks!!