Lease Modifications and Reassessment
Changes After Lease Commencement
Lease terms may change after commencement because of modifications, renewals, or reassessments. Depending on the nature of the change, companies may remeasure the lease liability and adjust the Right-of-Use asset accordingly.
- Changes in lease term.
- Changes in lease payments.
- Additional leased assets.
- Changes in purchase option assessments.
Note
Not every contract modification results in a new lease; some modifications require remeasurement of the existing lease.
Summary
Lease modifications may require remeasurement of lease balances and updated accounting.