CERTYNEX IFRS ACADEMY

Vaudrey leases an office floor for a lease term of 6 years; its 4-year extension option was not included in the lease term. At the beginning of the second year, Vaudrey enters into a sublease of that floor for 7 years, that is beyond the end of the previously determined lease term. What is the consequence for the head lease?

None: the sublease is a separate contract, entered into with a third party, that has no bearing on the lease term of the head lease.

The non-cancellable period of the head lease is automatically extended to 8 years.

It is a significant event within Vaudrey's control, which requires the extension option to be reassessed.

The lease term of the head lease will be revisited only at the end of the sixth year.