Yakub02
Banned
Accounting for lease modifications-
A lease modification might be accounted for as a new lease depending on circumstances. A lease modification is accounted for as a new lease if the modification changes the scope of the lease by adding the right to use one or more underlying assets and charges a consideration which is commensurate with the stand-alone selling price of the additional right-of-use and reflects the circumstances of the contract.
If a modification is not accounted for as a separate lease, the lease liability is remeasured by discounting the modified future cash flows using a revised discount rate.
The lease liability would be reduced by a modification that reduces the scope of the original lease. In that case, right-of-use asset is reduced by the proportionate reduction of the asset with any balance (gain or loss recognised in profit or loss.
The change in the lease liability for other lease modifications simply results in an adjustment to the right-of-use asset.
Companies might be lessors as a result of a variety of business models. Finance companies (often banks and their subsidiaries) Finance companies provide finance for the purchase of assets. In addition they might finance the use of assets through leases.
A lease modification might be accounted for as a new lease depending on circumstances. A lease modification is accounted for as a new lease if the modification changes the scope of the lease by adding the right to use one or more underlying assets and charges a consideration which is commensurate with the stand-alone selling price of the additional right-of-use and reflects the circumstances of the contract.
If a modification is not accounted for as a separate lease, the lease liability is remeasured by discounting the modified future cash flows using a revised discount rate.
The lease liability would be reduced by a modification that reduces the scope of the original lease. In that case, right-of-use asset is reduced by the proportionate reduction of the asset with any balance (gain or loss recognised in profit or loss.
The change in the lease liability for other lease modifications simply results in an adjustment to the right-of-use asset.
Companies might be lessors as a result of a variety of business models. Finance companies (often banks and their subsidiaries) Finance companies provide finance for the purchase of assets. In addition they might finance the use of assets through leases.
