The retailer Ambrelis leases a shop; the payment, made at year end, is indexed to a price index. At 1 January 20X3, the effective date of the review, the annual payment rises from 100,000 to 104,000 for the 3 remaining payments. The lease liability amounts to 267,301 before the review, computed at a rate of 6 %; Ambrelis's incremental borrowing rate at that date is 8 %. Compute the remeasured lease liability and the adjustment to the right-of-use asset (rounded to the nearest euro).
- Annual payment before indexation
- 100,000
- Annual payment after indexation
- 104,000
- Remaining payments (year end)
- 3
- Discount rate used so far
- 6 %
- Incremental borrowing rate at the review date
- 8 %
- Lease liability before the review
- 267,301