IFRS 16 - Impairment and Modification Gain

[Sheep]

Hi all,

I was wondering if anyone could help with the following queries.

I have 10 floors (original term is 3 years plus option of 2 years). Now, 2.5 years have gone. I have 3 floors vacant, of which, one is already impaired with provision taken. New lease terms have yet to be agreed with the landlord but expected to be as follows:
1. Return 3 floors to them by end of year 3.
2. Lease term will become 5 years plus option to extend by 3 years (likely to exercise)
3. Rent will be lower but stepped up over time (It is claimed to be lower than market rates, so the landlord claimed) - but I don't think this fact matters in my queries below.


My queries are:
1) With still 0.5 year to go before year-end, with 2 other floors vacant, should I take an impairment? If so, what factors should I into account? Is it the entire ROU of the 2 floors currently on the books?
2) On effective date, when the lease terms are modified, I am expecting a gain. So that means if I take an impairment loss this year and a modification gain next year. It seems a bit strange, although it may have fulfilled the accounting rules.
3) What if I am still required to keep the 10 floors but the lease is extended and/or rent is lower, does it matter to how impairment and/or modification gain are accounted for?

I hope I have explained the facts well. If anyone can help, that would be much appreciated.

[xuerebx]

Some high level thoughts. (1,2) The impairment test is carried out if there is an indication of impairment, irrespective of the fact that you might get an off-setting gain in the next financial reporting period. Most probably, the impairment test would be carried out on the vacant ROUs. (3) Not sure I follow on this point, sorry,