CERTYNEX IFRS ACADEMY

Valdrôme leases a building for 6 years. The annual payment, made at the end of each year, is 100,000 based on the consumer price index at the commencement date, and is then adjusted each year according to changes in that index. The group's economists forecast inflation of 2% per year. Which cash flows does Valdrôme discount to measure the lease liability at the commencement date?

Payments of 100,000 increased each year by the forecast inflation of 2%.

6 payments of 100,000, determined using the index at the commencement date.

Only the first-year payment, the following ones being variable and therefore excluded.

The undiscounted sum of the 6 payments of 100,000, that is 600,000.