IFRS-16 modification (Decrease in scope)
Posted: 05 Mar 2024, 07:23
Based on illustrative examples 17 and 18 of IFRS-16 that relate to lease modification, I am unable to grasp the following points:
1: In the first step of decrease in scope modification, when the Right-of-Use (ROU) asset undergoes a proportional decrease, is the lease liability also decreased proportionately, or is its new value derived based on lease modification? (In example 17, a proportional decrease was applied, whereas in example 18, a new value was derived based on the decrease in scope part of the lease modification.)
2: If a new value is indeed derived, which discount rate should be employed in the first step? (The original rate or the revised one?)
1: In the first step of decrease in scope modification, when the Right-of-Use (ROU) asset undergoes a proportional decrease, is the lease liability also decreased proportionately, or is its new value derived based on lease modification? (In example 17, a proportional decrease was applied, whereas in example 18, a new value was derived based on the decrease in scope part of the lease modification.)
2: If a new value is indeed derived, which discount rate should be employed in the first step? (The original rate or the revised one?)