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Modification and remeasurement of a lease

□ Reassess the lease classification

□ Update the discount rate used to remeasure the lease liability

□ Account for initial direct costs, lease incentives, and any other payment made or received in
connection with a modification to a lease in the same manner as those items would be accounted
for in connection with a new lease (see LG 4.2.2).

The following table provides an overview of the circumstances that could lead to the above
consequences.
Figure 5-2
Accounting for a lease remeasurement

Remeasure
the lease
liability and
Reallocate adjust the
contract right-of-use
Reassess consideration Update Reassess asset
contract (LG 2.4.3 and discount rate classification (LG 5.3.3 and
(LG 2) LG 5.3.3) (LG 3.3.4.6) (LG3) LG 5.3.4)
Contract
modification:
Lease contract is
modified in such a way     
that the combined
contract is accounted for
as one lease (LG 5.2)

Change in lease term:
An event occurs that
gives the lessee a
significant economic    
incentive to exercise, or
not exercise, a renewal
option (LG 5.3.1)

Change in purchase
option assessment:
An event occurs that
gives the lessee a
significant economic    
incentive to exercise, or
not exercise, a purchase
option (LG 5.3.1)
Contingency
resolution:
A contingency on which
variable payments are  
based is met such that
the variable payments
become fixed (LG 5.3.1)

Change in RVG:
Amounts owed under a
residual value guarantee  
become probable (LG
5.3.1)

5-6