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How to extend footnote lease

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okay it looks like weve stalled out on the numbers coming in so lets get going um good morning everyone and thank you for joining our webinar on lease counting today this is the third in a series of webinars that we have planned related to lease accounting kind of a repeat of what we did last year with some updates to it we have one more plan for a little bit later in the year so look out for that well have some communications around that as we solidify uh the timing on it you will see that the chat function is disabled but the q a function is enabled so if you have comments or questions please put them into the q a function and were going to do our best to respond to all those during the webinar today as weve done in the past but if we dont get to them well do some direct follow-up with you towards the end of our presentation we will open things up for q a so uh think about questions that you might have and you can chat them in at any point during the presentation and if we ca

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Is a change in lease term a modification?

A lease modification is defined as a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease.

What qualifies as a lease modification?

A lease modification includes adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term.

How do you account for an extension of a lease?

In the context of an extension of the lease term, since it does not add the right to use one or more underlying asset, the lease is accounted for as a continuation of the original lease and so the lease term spans from the commencement date of the original lease to the end of the extended period.

How do you account for lease modifications?

A lessors accounting for a lease modification depends on the type of modification made to the lease. Depending on the changes made to the lease contract, a lease modification can result in either a separate new contract (i.e., accounted for separate from the original contract) or a new modified contract.

What is the commencement date for IFRS 16?

IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019.

Is extending a lease A lease modification?

The agreement to extend the lease is a modification because it was not contemplated in the original terms of the lease. Since the modification does not add the right to use one or more underlying assets, it does not meet the criteria in IFRS 16.44(a) to be accounted for as a separate lease.

What is an example of a lease modification IFRS 16?

Appendix A). Examples of lease modifications are adding or terminating the right to use one or more underlying assets or extending or shortening the contractual lease term.

What is extension period IFRS 16?

A contract to lease a floor of a building has an initial non-cancellable period of five years, with an extension for an additional three years at market price if both parties agree. Before lease commencement, the lessee pays for non-movable leasehold improvements.

What is the lease period in IFRS 16?

IFRS 16 defines a lease term as the noncancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease.

Is a lease modification the same as a lease amendment?

A modification of lease, also called a lease amendment or lease modification, is an agreement that formally changes the original terms and conditions of a lease. It allows the parties to agree to changes without having to sign an entirely new lease.

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