Calvène leases a workshop; the annual payment of 50,000 is paid at the end of each year. At 1 January 20X4, 2 payments remain and the lease liability amounts to 92,971 (original rate 5 %). On that day, Calvène exercises an extension option of 3 years, at the same rent, which was not included in the lease term. The interest rate implicit in the lease cannot be readily determined; Calvène's incremental borrowing rate at that date is 6 %. Compute the remeasured lease liability and the adjustment to the right-of-use asset (rounded to the nearest euro).
- Lease liability before remeasurement
- 92,971
- Annual payment made at year end
- 50,000
- Number of payments remaining before the extension
- 2
- Length of the extension (years)
- 3
- Original discount rate
- 5 %
- Incremental borrowing rate at the reassessment date
- 6 %