IFRS16 lease modification

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JAM123
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Joined: 14 Sep 2021, 15:03

IFRS16 lease modification

Post by JAM123 »

Hello
The old lease starts 01/01/21 to 31/12/22 for 2 years. In Sep 21, we signed a new lease to have an extra room, the new lease starts 01/09/21 to 31/8/23 including the current space+new space, increase in considerations and further 6 months term from the original lease. Do we terminate the old lease and recognise the new lease? If we recognise as lease modification, what’s the calculation, do you have any working in details? I find the example for the increase and decrease in scope, but still don’t know how to calculate.
Thank you for your help.
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Marek Muc
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Re: IFRS16 lease modification

Post by Marek Muc »

the approach is set out on this page:
https://ifrscommunity.com/knowledge-bas ... fications/

if you're still struggling after having read this, please be more specific with your concerns
JAM123
Posts: 2
Joined: 14 Sep 2021, 15:03

Re: IFRS16 lease modification

Post by JAM123 »

Thank you Marek for your reply.

Am I correct to think the scenario is resulting in the accounting for Lease modification not a separate lease.

The adjustments are as follow:
1) Calculate the difference for the lease liability between old lease and new lease
PV of modified Lease liability (Sep 21- Aug 22) xxxx
Less PV of original Lease liability c/f from end of Aug-21 (xxxx)
The difference is accounted for: Dr ROU CR Lease liability xxxx

2) Continues amortising the right-of-use asset from Sep-21 over the remaining 24 months using the new PV of modified Lease.

JAM
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