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    1 D Ifrs 16 Example Lease Modification Scope Increase and Decrease 02

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    Imelda Febriputri
    The document provides an example of accounting for a lease modification that both increases and decreases the scope of a lease. Specifically, it involves terminating part of the leased space for two years but also extending the lease to additional space. The summary includes calculations of the accounting entries for: 1) gain on termination of part of the lease, 2) impact of a revised discount rate, and 3) liability and asset for additional leased space.

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    1 D Ifrs 16 Example Lease Modification Scope Increase and Decrease 02

    Uploaded by

    Imelda Febriputri
    31 views7 pages
    The document provides an example of accounting for a lease modification that both increases and decreases the scope of a lease. Specifically, it involves terminating part of the leased space for two years but also extending the lease to additional space. The summary includes calculations of the accounting entries for: 1) gain on termination of part of the lease, 2) impact of a revised discount rate, and 3) liability and asset for additional leased space.

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    1 d Ifrs 16 Example Lease Modification Scope Increase and Decrease 02

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    The document provides an example of accounting for a lease modification that both increases and decreases the scope of a lease. Specifically, it involves terminating part of the leased space for two years but also extending the lease to additional space. The summary includes calculations of the accounting entries for: 1) gain on termination of part of the lease, 2) impact of a revised discount rate, and 3) liability and asset for additional leased space.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    31 views7 pages

    1 D Ifrs 16 Example Lease Modification Scope Increase and Decrease 02

    Uploaded by

    Imelda Febriputri
    The document provides an example of accounting for a lease modification that both increases and decreases the scope of a lease. Specifically, it involves terminating part of the leased space for two years but also extending the lease to additional space. The summary includes calculations of the accounting entries for: 1) gain on termination of part of the lease, 2) impact of a revised discount rate, and 3) liability and asset for additional leased space.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 7

    last updated: 1/20/2019

    IFRS 16 example: lease modification – both increase and decrease in scope

    Below are calculations accompanying the example available on IFRScommunity.com under direct link below:

    https://ifrscommunity.com/knowledge-base/ifrs-16-recognition-and-measurement-of-leases/#link-ifrs_16_example_lease

    On IFRScommunity.com, years are written as 20X1, 20X2 etc., but this changes to 2001, 2002 etc. whenever a spreadsheet
    Hence this example starts in 2001, but is NOT outdated at all :)

    6% discount rate

    1/1/2001 commencement date


    payment date of payment discount factor discounted amount
    1 100,000 12/31/2001 0.9434 94,340
    2 100,000 12/31/2002 0.8900 89,000
    3 100,000 12/31/2003 0.8396 83,962
    4 100,000 12/31/2004 0.7921 79,209
    5 100,000 12/31/2005 0.7473 74,726
    6 100,000 12/31/2006 0.7050 70,496
    7 100,000 12/31/2007 0.6651 66,506
    8 100,000 12/31/2008 0.6274 62,741
    9 100,000 12/31/2009 0.5919 59,190
    10 100,000 12/31/2010 0.5584 55,839

    initial measurement 736,009

    Liability Schedule before lease modification

    year opening (1 Jan) discount payment (31 Dec) closing (31 Dec)
    2001 736,009 44,161 (100,000) 680,169
    2002 680,169 40,810 (100,000) 620,979
    2003 620,979 37,259 (100,000) 558,238
    2004 558,238 33,494 (100,000) 491,732
    2005 491,732 29,504 (100,000) 421,236
    2006 421,236 25,274 (100,000) 346,511
    2007 346,511 20,791 (100,000) 267,301
    2008 267,301 16,038 (100,000) 183,339
    2009 183,339 11,000 (100,000) 94,340
    2010 94,340 5,660 (100,000) (0)
    263,991
    Journal: Dr. Cr. 1,000,000
    Right-of use Aset 736,009 736,009
    Cash - 263,991
    Lease Liabilities 736,009 1,000,000

    Lease modification made on 1 January 2006 7% revised discount rate

    Calculation of gain/loss on the termination of the lease of 2,000 sq metres for years 9 and 10

    368,004 Right-of-use asset before modification


    60% Modified scope (3 out of 5 remaining years)
    147,202 Decrease of right-of-use asset
    220,803 Right-of-use after scope decrease

    421,236 Liability before modification


    267,301 Remaining liability relating to modified scope
    153,935 Decrease of liability

    6,733 Gain on the termination of the lease of 2,000 sq metres for years 9 and 10 -> immediate reco

    Impact of revised discount rate for years 6-8

    267,301.2 Liability relating to modifed scope at original discount rate


    262,431.6 Liability relating to modifed scope at revised discount rate
    - 4,870 Impact of revised discount rate for years 6-8

    Impact of increased leased space (additional 1,500 sq metres)

    131,216 Liability relating to the additional 1,500 sq metres


    131,216 Right-of-use asset relating to the additional 1,500 sq metres

    Liability Schedule after lease modification

    year opening (1 Jan) discount payment (31 Dec) closing (31 Dec)
    2006 393,647 27,555 (150,000) 271,203
    2007 271,203 18,984 (150,000) 140,187
    2008 140,187 9,813 (150,000) -
    950,000
    715,153
    (6,733)
    241,580
    950,000

    Summarry of the accounting entries made at lease modification

    1/ Gain on the termination of the lease of 2,000 sq metres for years 9 and 10 -> immediate recognition in P/L
    DR CR
    147,202 Right-of-use asset
    153,935 Lease liability
    6,733 Gain on the termination of the lease under old terms -> immediate recognition in P/L

    2/ Impact of revised discount rate for years 6-8 on the lease of 2,000 sq metres
    DR CR
    4,870 Right-of-use asset
    4,870 Lease liability

    3/ Impact of increased leased space (additional 1,500 sq metres)


    DR Cr
    131,216 Right-of-use asset
    131,216 Lease liability
    rect link below:

    /#link-ifrs_16_example_lease_modification_scope_increase_and_decrease_02

    etc. whenever a spreadsheet formula needs a valid format date as an input.

    Asset Schedule before lease modification


    736,009 gross book value

    year NBV opening (1 Jan) depreciation NBV closing (31 Dec)


    2001 736,009 (73,601) 662,408
    2002 662,408 (73,601) 588,807
    2003 588,807 (73,601) 515,206
    2004 515,206 (73,601) 441,605
    185,228 2005 441,605 (73,601) 368,004
    2006 368,004 (73,601) 294,403
    2007 294,403 (73,601) 220,803
    2008 220,803 (73,601) 147,202
    2009 147,202 (73,601) 73,601
    2010 73,601 (73,601) -
    (736,009)
    Total payments
    Depreciation expense
    Discounting expense
    Total expense

    d discount rate

    Liability relating to modifed scope at original discount rate

    payment date of payment discount factor discounted amount


    1 100,000 12/31/2006 0.9434 94,340
    2 100,000 12/31/2007 0.8900 89,000
    3 100,000 12/31/2008 0.8396 83,962

    267,301.2

    s 9 and 10 -> immediate recognition in P/L

    7% revised discount rate

    Liability relating to modifed scope at revised discount rate

    payment date of payment discount factor discounted amount


    1 100,000 12/31/2006 0.9346 93,457.9
    2 100,000 12/31/2007 0.8734 87,343.9
    3 100,000 12/31/2008 0.8163 81,629.8

    262,431.6

    Liability relating to the additional 1,500 sq metres

    payment date of payment discount factor discounted amount


    1 50,000 12/31/2006 0.9346 46,729.0
    2 50,000 12/31/2007 0.8734 43,671.9
    3 50,000 12/31/2008 0.8163 40,814.9

    131,215.8

    Asset Schedule after lease modification


    347,149 gross book value

    year NBV opening (1 Jan) depreciation NBV closing (31 Dec)


    2006 347,149 (115,716) 231,433
    2007 231,433 (115,716) 115,716
    2008 115,716 (115,716) -
    Total payments
    Depreciation expense
    Gain on termination
    Discounting expense
    Total expense

    ecognition in P/L

    e recognition in P/L
    (368,004)

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