Understanding ASC 842 and IFRS 16
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      2. Lease Accounting
      3. Understanding ASC 842 and IFRS 16

      When Should I Remeasure a Lease?

      The chart below provides an overview of the circumstances that could lead to a lease remeasurement and the required actions: 

       

      Reassess for definition of a lease

      Reallocate Contract Consideration

      Update Discount Rate

      Reassess Classification

      Remeasure the lease liability and adjust ROU Asset

      Contract Modification

      X

      X

      X

      X

      X

      Change in Lease Term

      		  

      X

      X

      X

      X

      Change in Purchase Option Assessment

      		  

      X

      X

      X

      X

      Contingency Resolution (ex: variable payments become lease payments due to contingency resolution)

      		  

      X

      		    

      X

      Change in Residual Value Guarantee

      		  

      X

      		    

      X

      Accounting Guidance:

      • PwC Leases October 2020 Figure 5-2
      • Deloitte A Roadmap to Applying the New Leasing Standard (2020) 8.5