Accounting for the effects of reassessing lease payments
(paragraph 39)
BC192 The IASB decided that, if a lessee remeasures its lease liability to reflect changes
in future lease payments, the lessee should recognise the amount of the
remeasurement as an adjustment to the cost of the right-of-use asset. The IASB
considered whether some changes to the measurement of the lease liability
should be recognised in profit or loss because, for example, the reassessment of
an option or a change in an index or a rate could be viewed as an event relating
to the current period. However, the IASB decided that a lessee should recognise
the remeasurement as an adjustment to the right-of-use assets for the following
reasons:
(a) a change in the assessment of extension, termination or purchase
options reflects the lessee’s determination that it has acquired more or
less of the right to use the underlying asset. Consequently, that change
is appropriately reflected as an adjustment to the cost of the right-of-use
asset.
(b) a change in the estimate of the future lease payments is a revision to the
initial estimate of the cost of the right-of-use asset, which should be
accounted for in the same manner as the initial estimated cost.
(c) the requirement to update the cost of the right-of-use asset is similar to
the requirements in IFRIC 1 Changes in Existing Decommissioning, Restoration
and Similar Liabilities. IFRIC 1 requires an entity to adjust the cost of the
related asset for a change in the estimated timing or amount of the
outflow of resources associated with a change in the measurement of an
existing decommissioning, restoration or similar liabili