IFRS 16 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Remeasurement of the lease liability and lease modification: Floor area reduction — amendment
Extension and floor-space reduction of a warehouse: remeasurement and modification
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IFRS 16 workpaper
- Level
- Advanced
- Estimated time
- ≈ 50 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Verdal Distribution (a fictitious company) has leased a logistics warehouse of 2,000 m² from Foncière Arvel (a fictitious company) since 1 January 20X1. Two events occur during the lease: at the end of 20X3, Verdal installs an automated storage system in the warehouse that leads it to include the extension option; on 1 January 20X6, an amendment reduces the floor space leased. Lease payments are made once a year, on 31 December, in arrears. The interest rate implicit in the lease cannot be readily determined. You are in charge of the accounting treatment by the lessee.
Assignment
Workpaper Remeasurement of the lease liability and lease modification.
Purpose of the workpaper
Qualify the event (reassessment of the term or of an option, change in an index or a guarantee, modification that is or is not a separate lease), determine the applicable rate, discount the revised payments, deal with any decrease in scope (gain or loss on the partial termination), then adjust the right-of-use asset for the remeasurement of the lease liability and record the entries.
Questions of the file covered by this workpaper
- Calculate the remeasured lease liability at 31 December 20X3.
- Calculate the adjustment to the right-of-use asset at 31 December 20X3.
- Which entry do you record at 31 December 20X3?
- Calculate the decrease in the right-of-use asset and in the lease liability and the gain or loss on the partial termination.
- Calculate the remeasured lease liability at 1 January 20X6.
- Calculate the residual adjustment to the right-of-use asset at 1 January 20X6.
- Which entries do you record at 1 January 20X6?
Documents in the file
Open the documents to pick out the relevant information.