On 1 January 20X1, Fontaury leased out a hangar under an operating lease for 5 years: the first year is free, then the lessee pays 50,000 at the beginning of each of the following four years. Income is recognised on a straight-line basis. On 1 January 20X3, the parties modify the lease: from that date, the payment is 45,000 a year, payable in advance, for a remaining term extended to 5 years. Compute the accrued income balance at 31 December 20X2 and the annual lease income to be recognised from 1 January 20X3.
- Term of the original lease
- 5
- Original annual payment after the rent-free period
- 50,000
- New annual payment
- 45,000
- Remaining term after the modification
- 5