IFRS 16 "Leases" - Lease Incentives

[Scotty]

Hi Guys,
Hope all is well, I am scotty from Toronto.
I have a quick question about lease incentive receivable.
Say for example, you have six months left on an Old lease contract (Jun - OCT) ("contract A"). You are entering into new lease "contract B" with a new landlord who is paying your rent for Contract A (lease incentive). What would be the best accounting treatment under IFRS 16?

[Marek Muc]

Hi Scotty! introductions are welcome, please start a new topic here

My first thought is that this incentive should be allocated to contract B as per standard IFRS 16 requirements and therefore be deducted from lease payments (or RoU if already received) under contract B.

What do you do with an old lease contract/ lease asset? I.e. terminate it with a penalty or continue to use this asset?

[Scotty]

Hi Marek.
Thanks for replying.
1. I have connect the incentive with contract B and offset against the lease obligation .
2. Contact A will continue up to Oct as the lease agreement ends at that point rather than doing a partial termination.

Thanks
Scotty