last updated: 12/22/2019

IFRS 16 example: lease modification – change in consideration only

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

https://ifrscommunity.com/knowledge-base/ifrs-16-lease-modifications/#link-ifrs_16_example_lease_modification_chang

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Hence this example starts in 2001, but is NOT outdated at all :)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)

1,000,000
736,009
 263,991
1,000,000

1 January 2006 - liability after decrease in consideration 7% revised discount rate

payment date of payment discount factor discounted amount

1 95,000 12/31/2006 0.9346 88,785.0
2 95,000 12/31/2007 0.8734 82,976.7
3 95,000 12/31/2008 0.8163 77,548.3
4 95,000 12/31/2009 0.7629 72,475.0
5 95,000 12/31/2010 0.7130 67,733.7

389,518.8

Entries made at the lease modification date

DR CR
31,717.6 Right-of-use asset
31,717.6 Lease liability

Liability Schedule after reassessment of lease term

year opening (1 Jan) discount payment (31 Dec) closing (31 Dec)
2006 389,519 27,266 (95,000) 321,785
2007 321,785 22,525 (95,000) 249,310
2008 249,310 17,452 (95,000) 171,762
2009 171,762 12,023 (95,000) 88,785
2010 88,785 6,215 (95,000) (0)

975,000
704,291
270,709
975,000
rect link below:

le_lease_modification_change_in_consideration_01

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
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) (0)

Total payments
Depreciation expense
 Discounting expense
Total expense

d discount rate

Asset Schedule after reassessment of lease term

336,287 gross book value

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

2006 336,287 (67,257) 269,029
2007 269,029 (67,257) 201,772
2008 201,772 (67,257) 134,515
2009 134,515 (67,257) 67,257
2010 67,257 (67,257) -

Total payments
Depreciation expense
Discounting expense
Total expense