CERTYNEX IFRS ACADEMY

The lessor Sorgues has leased out a warehouse under an operating lease. At the beginning of the fourth year, it agrees to a lower payment in exchange for an extension of the lease. At that date, Sorgues' statement of financial position shows accrued income arising from straight-lining. The finance director hesitates between several treatments. Which one complies with IFRS 16?

Recompute straight-line income from the start of the lease over the total modified term, and recognise the cumulative difference immediately in profit or loss.

Treat the modification as a new lease from its effective date and spread the remaining payments over the new term, taking the accrued income into account.

Keep the original straight-line income until the original end date, then recognise the payments of the extension.

Reverse the accrued income through profit or loss at the modification date, then spread only the new payments over the new term.