Example:  Company with 1 prior period presented.

(FASB: 842-10-65-1):

The following represents the transition and effective date information related to Accounting Standards Update No. 2016-02, Leases (Topic 842):
a. A public business entity, a not-for-profit entity that has issued or is a conduit bond obligor for securities that are traded, listed, or quoted on an exchange or an over-the-counter market (with an exception for those 8 entities that have not yet issued their financial statements or made financial statements available for issuance as described in the following sentence), and an employee benefit plan that files or furnishes financial statements with or to the U.S. Securities and Exchange Commission shall apply the pending content that links to this paragraph for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A not-for-profit entity that has issued or is a conduit bond obligor for securities that are traded, listed, or quoted on an exchange or an over-the-counter market that has not yet issued financial statements or made financial statements available for issuance as of June 3, 2020, shall apply the pending content that links to this paragraph for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Earlier application is permitted.

b. All other entities shall apply the pending content that links to this paragraph for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Earlier application is permitted.

c. In the financial statements in which an entity first applies the pending content that links to this paragraph, the entity shall recognize and measure leases within the scope of the pending content that links to this paragraph that exist at the application date, as determined by the transition method that the entity elects. An entity shall apply the pending content that links to this paragraph using one of the following two methods:

1. Retrospectively to each prior reporting period presented in the financial statements with the cumulative effect of initially applying the pending content that links to this paragraph recognized at the beginning of the earliest comparative period presented, subject to the guidance in (d) through (gg). Under this transition method, the application date shall be the later of the beginning of the earliest period presented in the financial statements and the commencement date of the lease.

2. Retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment, subject to the guidance in (d) through (gg). Under this transition method, the application date shall be the beginning of the reporting period in which the entity first applies the pending content that links to this paragraph.

(IFRS 16: Paragraph C1):

An entity shall apply this Standard for annual reporting periods beginning on or after 1 January 2019.

(IFRS 16: Paragraph C5):

A lessee shall apply this Standard to its leases either:

a. retrospectively to each prior reporting period presented applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; or
b. retrospectively with the cumulative effect of initially applying the Standard recognised at the date of initial application in accordance with paragraphs C7–C13.

(FASB: 830-10-45-2)

The assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity’s functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. 

Functional currency is the currency of the primary economic environment in which the entity operates.

Operating Lease Example:
Upon initial application of the standard, assume you have entered (on Add Lease screen) the following existing balance sheet balances under the previous lease accounting guidance (ASC 840/IAS 17):

Deferred Rent Long-Term Asset (GL#500)                             $1,000
Deferred Rent Short-Term Asset (GL#505)                            $2,000

Upon initial application, the opening entry will remove your existing balances under previous lease accounting guidance with an offset to the ROU Asset:

Dr. ROU Asset (GL#110)                                                        $50,000*
            Cr. Lease Liability (GL#120)                                                               $50,000
Dr. ROU Asset (GL#110)                                                        $3,000*
            Cr. Deferred Rent Long-Term Asset (GL#500)                                   $1,000
            Cr. Deferred Rent Short-Term Asset (GL#505)                                  $2,000

*In this example, the ROU Asset is calculated to be $50,000 under the new lease accounting guidance.  An additional $3,000 of ROU Asset is recognized in the journal entry to remove the balances under previous lease accounting guidance.

Finance Lease Example:       
Upon initial application of the standard, assume you have entered (on Add Lease screen) the following existing balance sheet balances under the previous lease accounting guidance (ASC 840/IAS 17):

Capital Lease Asset (GL#600)                                                $48,000
Capital Lease Liability (GL#605)                                             $50,000

Upon initial application, the opening entry will remove your existing balances under previous lease accounting guidance with an offset to ROU Asset:

Dr. ROU Asset (GL#210)                                                        $50,000*
            Cr. Lease Liability (GL#220)                                                               $50,000
Dr. Capital Lease Liability (GL#600)                                       $50,000
            Cr. ROU Asset (GL#210)                                                                    $2,000*
            Cr. Capital Lease Asset (GL#605)                                                      $48,000

• In this example, the ROU Asset is calculated to be $50,000 under the new lease accounting guidance.  The ROU Asset is reduced by $2,000 in the journal entry to remove the balances under the previous lease accounting guidance.

(FASB: 842-20-55-10):

The right-of-use asset is a nonmonetary asset while the lease liability is a monetary liability. Therefore, in accordance with Subtopic 830-10 on foreign currency matters, when accounting for a lease that is denominated in a foreign currency, if remeasurement into the lessee’s functional currency is required, the lease liability is remeasured using the current exchange rate, while the right-of-use asset is remeasured using the exchange rate as of the commencement date.

(FASB: 830-30-45-3):

Translation Using Current Exchange Rate
All elements of financial statements shall be translated by using a current exchange rate as follows:
a. For assets and liabilities, the exchange rate at the balance sheet date shall be used.
b. For revenues, expenses, gains, and losses, the exchange rate at the dates on which those elements are recognized shall be used.

(FASB: 830-10-55-10 to 11):

Use of Averages or Other Methods of Approximation 
55-10 Literal application of the standards in this Subtopic might require a degree of detail in record keeping and computations that could be burdensome as well as unnecessary to produce reasonable approximations of the results. Accordingly, it is acceptable to use averages or other methods of approximation. For example, because translation at the exchange rates at the dates the numerous revenues, expenses, gains, and losses are recognized is generally impractical, an appropriately weighted average exchange rate for the period may be used to translate those elements. Likewise, the use of other time- and effort-saving methods to approximate the results of detailed calculations is permitted.

55-11 Average rates used shall be appropriately weighted by the volume of functional currency transactions occurring during the accounting period. For example, to translate revenue and expense accounts for an annual period, individual revenue and expense accounts for each quarter or month may be translated at that quarter's or that month's average rate. The translated amounts for each quarter or month should then be combined for the annual totals.

(IAS 21: Paragraph 16):

The essential feature of a monetary item is a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: pensions and other employee benefits to be paid in cash; provisions that are to be settled in cash; lease liabilities; and cash dividends that are recognised as a liability. Similarly, a contract to receive (or deliver) a variable number of the entity’s own equity instruments or a variable amount of assets in which the fair value to be received (or delivered) equals a fixed or determinable number of units of currency is a monetary item. Conversely, the essential feature of a non-monetary item is the absence of a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: amounts prepaid for goods and services; goodwill; intangible assets; inventories; property, plant and equipment; right-of-use assets; and provisions that are to be settled by the delivery of a non-monetary asset.

(IAS 21: Paragraph 39):
The results and financial position of an entity whose functional currency is not the currency of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures:
(a) assets and liabilities for each statement of financial position presented (ie including comparatives) shall be translated at the closing rate at the date of that statement of financial position;
(b) income and expenses for each statement presenting profit or loss and other comprehensive income (ie including comparatives) shall be translated at exchange rates at the dates of the transactions; and
(c) all resulting exchange differences shall be recognised in other comprehensive income.

(IAS 21: Paragraph 40):
For practical reasons, a rate that approximates the exchange rates at the dates of the transactions, for example an average rate for the period, is often used to translate income and expense items. However, if exchange rates fluctuate significantly, the use of the average rate for a period is inappropriate

(FASB: 842-20-55-10):

The right-of-use asset is a nonmonetary asset while the lease liability is a monetary liability. Therefore, in accordance with Subtopic 830-10 on foreign currency matters, when accounting for a lease that is denominated in a foreign currency, if remeasurement into the lessee’s functional currency is required, the lease liability is remeasured using the current exchange rate, while the right-of-use asset is remeasured using the exchange rate as of the commencement date.

(FASB: 830-30-45-3):

Translation Using Current Exchange Rate
All elements of financial statements shall be translated by using a current exchange rate as follows:
a. For assets and liabilities, the exchange rate at the balance sheet date shall be used.
b. For revenues, expenses, gains, and losses, the exchange rate at the dates on which those elements are recognized shall be used.

(FASB: 830-10-55-10 to 11):

Use of Averages or Other Methods of Approximation 
55-10 Literal application of the standards in this Subtopic might require a degree of detail in record keeping and computations that could be burdensome as well as unnecessary to produce reasonable approximations of the results. Accordingly, it is acceptable to use averages or other methods of approximation. For example, because translation at the exchange rates at the dates the numerous revenues, expenses, gains, and losses are recognized is generally impractical, an appropriately weighted average exchange rate for the period may be used to translate those elements. Likewise, the use of other time- and effort-saving methods to approximate the results of detailed calculations is permitted.

55-11 Average rates used shall be appropriately weighted by the volume of functional currency transactions occurring during the accounting period. For example, to translate revenue and expense accounts for an annual period, individual revenue and expense accounts for each quarter or month may be translated at that quarter's or that month's average rate. The translated amounts for each quarter or month should then be combined for the annual totals.

(IAS 21: Paragraph 16):

The essential feature of a monetary item is a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: pensions and other employee benefits to be paid in cash; provisions that are to be settled in cash; lease liabilities; and cash dividends that are recognised as a liability. Similarly, a contract to receive (or deliver) a variable number of the entity’s own equity instruments or a variable amount of assets in which the fair value to be received (or delivered) equals a fixed or determinable number of units of currency is a monetary item. Conversely, the essential feature of a non-monetary item is the absence of a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: amounts prepaid for goods and services; goodwill; intangible assets; inventories; property, plant and equipment; right-of-use assets; and provisions that are to be settled by the delivery of a non-monetary asset.

(IAS 21: Paragraph 39):
The results and financial position of an entity whose functional currency is not the currency of a hyperinflationary economy shall be translated into a different presentation currency using the following procedures:
(a) assets and liabilities for each statement of financial position presented (ie including comparatives) shall be translated at the closing rate at the date of that statement of financial position;
(b) income and expenses for each statement presenting profit or loss and other comprehensive income (ie including comparatives) shall be translated at exchange rates at the dates of the transactions; and
(c) all resulting exchange differences shall be recognised in other comprehensive income.

(IAS 21: Paragraph 40):
For practical reasons, a rate that approximates the exchange rates at the dates of the transactions, for example an average rate for the period, is often used to translate income and expense items. However, if exchange rates fluctuate significantly, the use of the average rate for a period is inappropriate

(FASB: 842-20-55-10):
The right-of-use asset is a nonmonetary asset while the lease liability is a monetary liability. Therefore, in accordance with Subtopic 830-10 on foreign currency matters, when accounting for a lease that is denominated in a foreign currency, if remeasurement into the lessee’s functional currency is required, the lease liability is remeasured using the current exchange rate, while the right-of-use asset is remeasured using the exchange rate as of the commencement date.

(IAS 21: Paragraph 16):

The essential feature of a monetary item is a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: pensions and other employee benefits to be paid in cash; provisions that are to be settled in cash; lease liabilities; and cash dividends that are recognised as a liability. Similarly, a contract to receive (or deliver) a variable number of the entity’s own equity instruments or a variable amount of assets in which the fair value to be received (or delivered) equals a fixed or determinable number of units of currency is a monetary item. Conversely, the essential feature of a non-monetary item is the absence of a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency. Examples include: amounts prepaid for goods and services; goodwill; intangible assets; inventories; property, plant and equipment; right-of-use assets; and provisions that are to be settled by the delivery of a non-monetary asset.

(FASB: 842-10-65-1(c):

Commencement Date is the date on which a lessor makes an underlying asset available for use by a lessee.

c. In the financial statements in which an entity first applies the pending content that links to this paragraph, the entity shall recognize and measure leases within the scope of the pending content that links to this paragraph that exist at the application date, as determined by the transition method that the entity elects.

(IFRS 16: Appendix A, Page 26, C5):

A lessee shall apply this Standard to its leases either:
(a) retrospectively to each prior reporting period presented applying IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; or
(b) retrospectively with the cumulative effect of initially applying the Standard recognised at the date of initial application in accordance with paragraphs C7–C13.

(FASB: 842-10-30-1):

Lease Term is the noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following:

a. Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option
b. Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option (i.e., bypassing an early termination option)
c. Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.

(IFRS 16: Paragraph 18):
An entity shall determine the lease term as the non-cancellable period of a lease, together with both:
(a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
(b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

(IFRS 16: Paragraph 19):
In assessing whether a lessee is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, an entity shall consider all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease, as described in paragraphs B37–B40.

(IFRS 16: Paragraph 20):
A lessee shall reassess whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that:
(a) is within the control of the lessee; and
(b) affects whether the lessee is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term (as described in paragraph B41).

(FASB: 842-10-30-1):

Lease Term is the noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following:

a. Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option
b. Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option (i.e., bypassing an early termination option)
c. Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.

(IFRS 16: Paragraph 18):
An entity shall determine the lease term as the non-cancellable period of a lease, together with both:
(a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
(b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

(IFRS 16: Paragraph 19):
In assessing whether a lessee is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, an entity shall consider all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease, as described in paragraphs B37–B40.

(IFRS 16: Paragraph 20):
A lessee shall reassess whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that:
(a) is within the control of the lessee; and
(b) affects whether the lessee is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term (as described in paragraph B41).

Start Date: 1/5/2023
End Date: 1/4/2024
Term: 13 Months
ROU Asset Life: 12 Months (Defaults to Term -1)
Amortization Expense over Term: $12,000

(FASB: 842-20-35-8/IFRS 16: Paragraph 32):
A lessee shall amortize the right-of-use (ROU) asset from the commencement date (Start Date) to the earlier of:

1. The end of the useful life (defined below) of the right-of-use asset; or

2. The end of the Lease Term.

However, if the lease transfers ownership of the underlying asset to the lessee or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the right-of use asset to the end of the useful life of the underlying asset.

(FASB: Glossary, Page 101):

Useful life means the period over which an asset is expected to contribute directly or indirectly to future cash flows.

(IFRS 16: Appendix A Defined Terms, Page 28):

Useful life means the period over which:

1. an asset is expected to be available for use by an entity; or

2. the number of production or similar units expected to be obtained from an asset by an entity.

(FASB: 842-20-30-2): 

The discount rate for the lease initially used to determine the present value of the Lease Payments for a lessee is calculated on the basis of information available at the commencement date.

(FASB: 842-20-30-3):

A lessee should use the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, a lessee uses its incremental borrowing rate. (FASB: 842 Only, Not Allowed under IFRS 16): A lessee that is not a public business entity is permitted to use a risk-free discount rate for the lease instead of its incremental borrowing rate, determined using a period comparable with that of the lease term, as an accounting policy election made by class of underlying asset.

(FASB 842: Glossary Page 23)
Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.(FASB 842: Glossary Page 28):

Rate Implicit in the Lease:  The rate of interest that, at a given date, causes the aggregate present value of (a) the lease payments and (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease term to equal the sum of (1) the fair value of the underlying asset minus any related investment tax credit retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor. 

(IFRS 16: Paragraph 26):

At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee shall use the lessee’s incremental borrowing rate.

(IFRS 16: Appendix A Defined Terms):

Interest Rate Implicit in the Lease: The rate of interest that causes the present value of (a) the lease payments and (b) the unguaranteed residual value to equal the sum of (i) the fair value of the underlying asset and (ii) any initial direct costs of the lessor. Fair Value: For the purpose of applying the lessor accounting requirements in this Standard, the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

(FASB: 842, Glossary Page 23): 

Incremental borrowing rate: The rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the Lease Payments in a similar economic environment.

(IFRS 16: Appendix A Defined Terms):

Incremental Borrowing Rate: The rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of use asset in a similar economic environment.

(FASB: 842-20-35-5):

If there is a remeasurement of the lease liability in accordance with paragraph 842-20-35-4, the lessee shall update the discount rate for the lease at the date of remeasurement on the basis of the remaining lease term and the remaining lease payments unless the remeasurement of the lease liability is the result of one of the following:

a. A change in the lease term or the assessment of whether the lessee will exercise an option to purchase the underlying asset and the discount rate for the lease already reflects that the lessee has an option to extend or terminate the lease or to purchase the underlying asset.

b. A change in amounts probable of being owed by the lessee under a residual value guarantee (see paragraph 842-10-35-4(c)(3)).

c. A change in the lease payments resulting from the resolution of a contingency upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based (see paragraph 842-10-35-4(b)).

(IFRS 16: Paragraphs 40,43):

Paragraph 40:

A lessee shall remeasure the lease liability by discounting the revised lease payments using a revised discount rate, if either:
(a) there is a change in the lease term, as described in paragraphs 20–21. A lessee shall determine the revised lease payments on the basis of the revised lease term; or
(b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances described in paragraphs 20–21 in the context of a purchase option. A lessee shall determine the revised lease payments to reflect the change in amounts payable under the purchase option.

Paragraph 43:

A lessee shall use an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In that case, the lessee shall use a revised discount rate that reflects changes in the interest rate.

(842-10-55-30):

Lease incentives include both of the following:
a. Payments made to or on behalf of the lessee
b. Losses incurred by the lessor as a result of assuming a lessee’s preexisting lease with a third party. In that circumstance, the lessor and the lessee should independently estimate any loss attributable to that assumption. For example, the lessee’s estimate of the lease incentive could be based on a comparison of the new lease with the market rental rate available for similar underlying assets or the market rental rate from the same lessor without the lease assumption. The lessor should estimate any loss on the basis of the total remaining costs reduced by the expected benefits from the sublease of use of the assumed underlying asset.

(IFRS 16: Appendix A Definition of Terms, Page 26):

Lease Incentives: Payments made by lessor to lessee, or the reimbursement or assumption by a lessor of costs of a lessee.

(FASB: 842-20-30-5):

The Incentive Received reduces the calculation of the right-of-use asset. At the Start Date, the cost of the right-of-use asset shall consist of all of the following:

a. The amount of the initial measurement of the lease liability
b. Any Lease Payments made to the lessor at or before the commencement date, minus any lease Incentives Received
c. Any Initial Direct Costs incurred by the lessee

(IFRS 16: Paragraph 24):

The cost of the right-of-use asset shall comprise:
(a) the amount of the initial measurement of the lease liability, as described in paragraph 26;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period.

(FASB: 842, Glossary, Page 23):

Initial direct costs: Incremental costs of a lease that would not have been incurred if the lease had not been obtained.

(IFRS 16: Appendix A Definition of Terms, Page 26):

Initial direct costs: Incremental costs of obtaining a lease that would not have been incurred if the lease had not been obtained, except for such costs incurred by a manufacturer or dealer lessor in connection with a finance lease.

(FASB: 842-10-30-9):

Initial Direct Costs for a lessee may include, for example, either of the following:

a. Commissions
b. Payments made to an existing tenant to incentivize that tenant to terminate its lease

(FASB: 842-10-30-10):

Costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as fixed employee salaries, are not initial direct costs. The following items are examples of costs that are not initial direct costs:
a. General overheads, including, for example, depreciation, occupancy and equipment costs, unsuccessful origination efforts, and idle time
b. Costs related to activities performed by the lessor for advertising, soliciting potential lessees, servicing existing leases, or other ancillary activities
c. Costs related to activities that occur before the lease is obtained, such as costs of obtaining tax or legal advice, negotiating lease terms and

(FASB: 842-20-30-5):
The Initial Direct Costs increases the calculation of the right-of-use asset. At the Start Date, the cost of the right-of-use asset shall consist of all of the following:

a. The amount of the initial measurement of the lease liability
b. Any Lease Payments made to the lessor at or before the commencement date, minus any lease Incentives Received
c. Any Initial Direct Costs incurred by the lessee

(IFRS 16: Paragraph 24):

The cost of the right-of-use asset shall comprise:
(a) the amount of the initial measurement of the lease liability, as described in paragraph 26;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period.

(FASB: 842-10-30-5):
At the commencement date (Start Date), the Lease Payments shall consist of the following payments relating to the use of the underlying asset during the Lease Term:

a. Fixed payments, including in substance fixed payments (i.e., payments that may, in form, contain variability but that, in-substance, are unavoidable-See FASB: 842-10-55-31/IFRS 16: Paragraph B42), less any lease incentives paid or payable to the lessee. The reduction for lease incentives should be only those received after the Start Date. If the incentives are received at or prior to the Start Date, include them in the Incentives Received field in the software.

1. Fixed payments includes activities or costs that are not components of a contract, such as reimbursement of lessor’s costs (e.g., real estate taxes or insurance in an office lease) per FASB 842-10-55-142 through 3.

b. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date (Start Date). Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. Variable lease payments not dependent on an index or rate, such as % of sales, are not deemed Lease Payments and should be entered into the "Variable Expenses & Non-Lease Payments" section of the software.

1. Under FASB only, each time there is a change in the variable lease payment resulting from a change in the reference index or rate, record as a period expense, which can be entered in the section titled, "Payment Stream for Variable Expense and Non-Lease Payments." See Examples at FASB: 842-10-55-225 through 231.

2. Under IFRS 16 only, each time there is a change in the payment resulting from a change in the reference index or rate, revise the Lease Payments to include this change (Use Revision tab).

c. The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option (assessed considering the factors in paragraph FASB: 842-10-55-26/IFRS 16: Paragraphs B37-B40).
d. Payments for penalties for terminating the lease if the Lease Term reflects the lessee exercising an option to terminate the lease.
e. Fees paid by the lessee to the owners of a special-purpose entity (SPE) for structuring the transaction.
f. For a Lessee only, Amounts probable of being owed by the lessee under residual value guarantees (see FASB: 842-10-55-34 through 36/IFRS 16: Appendix A, Page 27).
g. Payments made to return the underlying asset to its original condition (see FASB: 842-10-55-34/IFRS 16: Paragraph 24 for criteria).
h. Payments for nonlease components (e.g., common area maintenance payments in an office lease) only if lessee has elected a policy to combine lease and nonlease components per FASB: 842-10-15-37/IFRS 16: Paragraph 15.

(IFRS 16: Paragraph 27):
At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:
(a) fixed payments (including in-substance fixed payments as described in paragraph B42), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date (as described in paragraph 28);
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option (assessed considering the factors described in paragraphs B37–B40); and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

(FASB: 842-10-30-6): Lease Payments do not include any of the following:

a. Variable Lease Payments not based on an index or a rate. Examples include payments based on a % of sales or based on the number of hours an asset is used. See examples at FASB: 842-10-55-150 through 154 and 842-10-55-232 through 234.

b. Any guarantee by the lessee of the lessor’s debt

c. Amounts allocated to nonlease components in accordance with 842-10-15-33 through 42/IFRS 16: Paragraph 12-16) if lessee does not elect a policy to combine lease and nonlease components per FASB: 842-10-15-37/IFRS 16: Paragraph 15).

d. Payments for activities or costs that are not components of a contract (e.g., taxes or insurance in an office lease) if those amounts are variable per FASB 842-10-55-141 through 142.

(IFRS 16: Appendix A Definition of Terms):
Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the
following:
(a) fixed payments (including in-substance fixed payments ), less any lease incentives;
(b) variable lease payments that depend on an index or a rate;
(c) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine
non-lease components with a lease component and to account for them as a single lease component.

For the lessor, lease payments also include any residual value guarantees provided to the lessor by the lessee, a party related
to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the
guarantee. Lease payments do not include payments allocated to non-lease components.

(FASB: 842-10-30-5):
At the commencement date (Start Date), the Lease Payments shall consist of the following payments relating to the use of the underlying asset during the Lease Term:

a. Fixed payments, including in substance fixed payments (i.e., payments that may, in form, contain variability but that, in-substance, are unavoidable-See FASB: 842-10-55-31/IFRS 16: Paragraph B42), less any lease incentives paid or payable to the lessee. The reduction for lease incentives should be only those received after the Start Date. If the incentives are received at or prior to the Start Date, include them in the Incentives Received field in the software.

1. Fixed payments includes activities or costs that are not components of a contract, such as reimbursement of lessor’s costs (e.g., real estate taxes or insurance in an office lease) per FASB 842-10-55-142 through 3.

b. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date (Start Date). Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. Variable lease payments not dependent on an index or rate, such as % of sales, are not deemed Lease Payments and should be entered into the "Variable Expenses & Non-Lease Payments" section of the software.

1. Under FASB only, each time there is a change in the variable lease payment resulting from a change in the reference index or rate, record as a period expense, which can be entered in the section titled, "Payment Stream for Variable Expense and Non-Lease Payments." See Examples at FASB: 842-10-55-225 through 231.

2. Under IFRS 16 only, each time there is a change in the payment resulting from a change in the reference index or rate, revise the Lease Payments to include this change (Use Revision tab).

c. The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option (assessed considering the factors in paragraph FASB: 842-10-55-26/IFRS 16: Paragraphs B37-B40).
d. Payments for penalties for terminating the lease if the Lease Term reflects the lessee exercising an option to terminate the lease.
e. Fees paid by the lessee to the owners of a special-purpose entity (SPE) for structuring the transaction.
f. For a Lessee only, Amounts probable of being owed by the lessee under residual value guarantees (see FASB: 842-10-55-34 through 36/IFRS 16: Appendix A, Page 27).
g. Payments made to return the underlying asset to its original condition (see FASB: 842-10-55-34/IFRS 16: Paragraph 24 for criteria).
h. Payments for nonlease components (e.g., common area maintenance payments in an office lease) only if lessee has elected a policy to combine lease and nonlease components per FASB: 842-10-15-37/IFRS 16: Paragraph 15.

(IFRS 16: Paragraph 27):
At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:
(a) fixed payments (including in-substance fixed payments as described in paragraph B42), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date (as described in paragraph 28);
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option (assessed considering the factors described in paragraphs B37–B40); and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

(FASB: 842-10-30-6): Lease Payments do not include any of the following:

a. Variable Lease Payments not based on an index or a rate. Examples include payments based on a % of sales or based on the number of hours an asset is used. See examples at FASB: 842-10-55-150 through 154 and 842-10-55-232 through 234.

b. Any guarantee by the lessee of the lessor’s debt

c. Amounts allocated to nonlease components in accordance with 842-10-15-33 through 42/IFRS 16: Paragraph 12-16) if lessee does not elect a policy to combine lease and nonlease components per FASB: 842-10-15-37/IFRS 16: Paragraph 15).

d. Payments for activities or costs that are not components of a contract (e.g., taxes or insurance in an office lease) if those amounts are variable per FASB 842-10-55-141 through 142.

(IFRS 16: Appendix A Definition of Terms):
Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the
following:
(a) fixed payments (including in-substance fixed payments ), less any lease incentives;
(b) variable lease payments that depend on an index or a rate;
(c) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine
non-lease components with a lease component and to account for them as a single lease component.

For the lessor, lease payments also include any residual value guarantees provided to the lessor by the lessee, a party related
to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the
guarantee. Lease payments do not include payments allocated to non-lease components.

(FASB: 842-10-30-5):
At the commencement date, the lease payments shall consist of the following payments relating to the use of the underlying asset during the lease term:
a. Fixed payments, including in substance fixed payments, less any lease incentives paid or payable to the lessee (see paragraphs 842-10-55-30 through 55-31).
b. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date.
c. The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option (assessed considering the factors in paragraph 842-10-55-26).
d. Payments for penalties for terminating the lease if the lease term (as determined in accordance with paragraph 842-10-30-1) reflects the lessee exercising an option to terminate the lease.
e. Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction. However, such fees shall not be included in the fair value of the underlying asset for purposes of applying paragraph
842-10-25-2(d).
f. For a lessee only, amounts probable of being owed by the lessee under residual value guarantees (see paragraphs 842-10-55-34 through 55-36).

(IFRS 16: Paragraph 27):
At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:
(a) fixed payments (including in-substance fixed payments as described in paragraph B42), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date (as described in paragraph 28);
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option (assessed considering the factors described in paragraphs B37–B40); and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

(IFRS 16: Appendix A Definition of Terms):
Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the
following:
(a) fixed payments (including in-substance fixed payments ), less any lease incentives;
(b) variable lease payments that depend on an index or a rate;
(c) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine non-lease components with a lease component and to account for them as a single lease component.

For the lessor, lease payments also include any residual value guarantees provided to the lessor by the lessee, a party related to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee. Lease payments do not include payments allocated to non-lease components.

(FASB: 842-10-25-2)
A lessee shall classify a lease as a finance lease and a lessor shall classify a lease as a sales-type lease when the lease meets any of the following criteria at lease commencement:
a. The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
b. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
c. The lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.
d. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) equals or
exceeds substantially all of the fair value of the underlying asset.
e. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

(FASB: 842-10-25-3)
When none of the criteria in paragraph 842-10-25-2 are met:
a. A lessee shall classify the lease as an operating lease.
b. A lessor shall classify the lease as either a direct financing lease or an operating lease. A lessor shall classify the lease as an operating lease unless both of the following criteria are met, in which case the lessor shall
classify the lease as a direct financing lease:

1. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) and/or
   any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset.

2. It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.

(FASB: Glossary, Page 161)
Estimated Residual Value: The estimated fair value of the leased property at the end of the lease term.

(FASB: Glossary, Page 28)
Residual Value Guarantee: A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount.

(IFRS 16: Appendix A Definition of Terms):
Residual Value Guarantee: A guarantee made to a lessor by a party unrelated to the lessor that the value (or part of the value) of an underlying asset at the end of a lease will be at least a specified amount.

(FASB: Glossary, Page 28)
Unguaranteed Residual Asset: The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.

(IFRS 16: Appendix A Definition of Terms):
Unguaranteed Residual Value: That portion of the residual value of the underlying asset, the realisation of which by a lessor is not assured or is guaranteed solely by a party related to the lessor.

Residual Value Guarantees for a Portfolio of Underlying Assets

(FASB: 842-10-55-9):

Lessors may obtain residual value guarantees for a portfolio of underlying assets for which settlement is not solely based on the residual value of the individual underlying assets. In such cases, the lessor is economically assured of receiving a minimum residual value for a portfolio of assets that are subject to separate leases but not for each individual asset. Accordingly, when an
asset has a residual value in excess of the “guaranteed” amount, that excess is offset against shortfalls in residual value that exist in other assets in the portfolio.

(FASB: 842-10-55-10):

Residual value guarantees of a portfolio of underlying assets preclude a lessor from determining the amount of the guaranteed residual value of any individual underlying asset within the portfolio. Consequently, no such amounts should be considered when evaluating the lease classification criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1).

(FASB: 842-10-25-2): A lessee shall classify a lease as a finance lease when the lease meets any of the following criteria at lease commencement:

a. The lease transfers ownership of the underlying asset to the lessee by the end of the Lease Term.

b. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

c. The Lease Term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date (Start Date) falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.

(FASB: 842-10-55-2 (a)): Major part defined as 75% of the economic life is deemed a reasonable approach.

(FASB: 842, Page 23): Economic Life is either the period over which an asset is expected to be economically usable by one or more users or the number of production or similar units expected to be obtained from an asset by one or more users. Economic life is longer useful life (term used to determine ROU Asset Life) because it is the period by which all of the users can utilize the asset, while useful life is the period by which the lessee (only) will utilize the asset.

d. The present value of the sum of the Lease Payments and any residual value guaranteed by the lessee that is not already reflected in the Lease Payments in accordance with paragraph 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

(FASB: 842-10-55-2 (c)): Substantially all defined as 90% of the fair value of the underlying asset is deemed a reasonable approach.

e. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the Lease Term.

(FASB: 842-10-25-1): An entity shall classify each separate lease component at the commencement date. An entity shall not reassess the lease classification after the commencement date unless the contract is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8. In addition, a lessee also shall reassess the lease classification after the commencement date if there is a change in the lease term or the assessment of whether the lessee is reasonably certain to exercise an option to purchase the underlying asset.

(FASB: 842-10-25-3):
When none of the criteria in paragraph 842-10-25-2 are met:
a. A lessee shall classify the lease as an operating lease.
b. A lessor shall classify the lease as either a direct financing lease or an operating lease. A lessor shall classify the lease as an operating lease unless both of the following criteria are met, in which case the lessor shall classify the lease as a direct financing lease:

1. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) and/or
   any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset.

2. It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.

(IFRS: Paragraph 63)
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are:
(a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
(b) the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the
inception date, that the option will be exercised;
(c) the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;
(d) at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and
(e) the underlying asset is of such a specialised nature that only the lessee can use it without major modifications.

(IFRS: Paragraph 64)
Indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease are:
(a) if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee;
(b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease); and
(c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.

(IFRS: Paragraph 65)
The examples and indicators in paragraphs 63–64 are not always conclusive. If it is clear from other features that the lease does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset, the lease is classified as an operating lease. For example, this may be the case if ownership of the underlying asset transfers at the end of the lease for a variable payment equal to its then fair value, or if there are variable lease payments, as a result of which the lessor does not transfer substantially all such risks and rewards.

(FASB: 842-10-25-3)
When none of the criteria in paragraph 842-10-25-2 are met:
a. A lessee shall classify the lease as an operating lease.
b. A lessor shall classify the lease as either a direct financing lease or an operating lease. A lessor shall classify the lease as an operating lease unless both of the following criteria are met, in which case the lessor shall classify the lease as a direct financing lease:

1. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) and/or any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset.

2. It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.

(FASB: 842-30-25-3)
The guidance in paragraphs 842-30-25-1 through 25-2 notwithstanding, if collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, is not probable at the commencement date, the lessor shall not derecognize the underlying asset but shall recognize lease payments received—including variable lease payments—as a deposit liability until the earlier of either of the following:
a. Collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, becomes probable. If collectibility is not probable at the commencement date, a lessor shall continue to assess collectibility to determine whether the lease payments and any amount necessary to satisfy a residual value guarantee are probable of collection.
b. Either of the following events occurs:

1. The contract has been terminated, and the lease payments received from the lessee are nonrefundable.

2. The lessor has repossessed the underlying asset, it has no further obligation under the contract to the lessee, and the lease payments received from the lessee are nonrefundable.

(FASB: 842-30-25-4)
When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(a) is met (that is, the date at which collectibility of the lease payments plus any amount necessary to satisfy a residual value guarantee provided by the lessee is assessed as probable), the lessor shall do all of the following:
a. Derecognize the carrying amount of the underlying asset
b. Derecognize the carrying amount of any deposit liability recognized in accordance with paragraph 842-30-25-3
c. Recognize a net investment in the lease on the basis of the remaining lease payments and remaining lease term, using the rate implicit in the lease determined at the commencement date
d. Recognize selling profit or selling loss calculated as:

1. The lease receivable; plus

2. the carrying amount of the deposit liability; minus

3. the carrying amount of the underlying asset, net of the unguaranteed residual asset

(FASB: 842-30-25-5)
When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(b) is met, the lessor shall derecognize the carrying amount of any deposit liability recognized in accordance with paragraph 842-30-25-3, with the corresponding amount recognized as lease income.

(FASB: 842-30-25-6)
If collectibility is probable at the commencement date for a sales-type lease or for a direct financing lease, a lessor shall not reassess whether collectibility is probable. Subsequent changes in the credit risk of the lessee shall be accounted for in accordance with the impairment guidance applicable to the net investment in the lease in paragraph 842-30-35-3.

(FASB: 842, Page 36):

Variable Expenses: Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date (Start Date), other than the passage of time. Variable lease payments not based on an index or a rate (such as the Consumer Price Index or a market interest rate) should be entered here as they are not deemed Lease Payments. Examples include a) payments based on a % of sales or based on the number of hours an asset is used, or b) real estate taxes that are not fixed. See examples at FASB: 842-10-141, 842-10-55-150 through 154 and 842-10-55-232 through 234. Variable lease payments that depend on an index or a rate initially measured using the index or rate at the commencement date are "Lease Payments" and should be entered in “Lease Payment and Classification Section.”

1. FASB only, each time there is a change in the payment resulting from a change in the reference index or rate, record as a period expense, which can be entered in this section titled, "Payment Stream for Variable Expense and Non-Lease Payments." See Examples at FASB: 842-10-55-225 through 231.

(IFRS 16: Appendix A, Page 18):

Variable Expenses: Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date (Start Date), other than the passage of time.

1. IFRS only (IFRS 16: Paragraph 42(b)), each time there is a change in the payments resulting from a change in the reference index or rate, revise the Lease Payments to remeasure the lease liability to include this change (Use Revision tab)

(FASB: 842, Page 11/IFRS 16: Paragraphs 12-16):

Nonlease Components: Topic 842 requires an entity to separate the lease components from the nonlease components (for example, maintenance services or other activities that transfer a good or service to the customer) in a contract. Although this was a requirement in previous GAAP, Topic 842 provides more guidance on how to identify and separate components than previous GAAP. Only the lease components must be accounted for in accordance with Topic 842. The consideration in the contract is allocated to the lease and nonlease components on a relative standalone price basis for lessees. Consideration attributable to nonlease components is not a Lease Payment and, therefore, is not included in the measurement of lease assets or lease liabilities. Entities should account for nonlease components in accordance with other applicable Topics.

As a practical expedient, a lessee may elect, by class of underlying asset, not to separate nonlease components from lease components, and instead account for each lease component and any associated nonlease components as a single lease component.

(FASB: 842, Page 36):

Variable Expenses: Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date (Start Date), other than the passage of time. Variable lease payments not based on an index or a rate (such as the Consumer Price Index or a market interest rate) should be entered here as they are not deemed Lease Payments. Examples include a) payments based on a % of sales or based on the number of hours an asset is used, or b) real estate taxes that are not fixed. See examples at FASB: 842-10-141, 842-10-55-150 through 154 and 842-10-55-232 through 234. Variable lease payments that depend on an index or a rate initially measured using the index or rate at the commencement date are "Lease Payments" and should be entered in “Lease Payment and Classification Section.”

1. FASB only, each time there is a change in the payment resulting from a change in the reference index or rate, record as a period expense, which can be entered in this section titled, "Payment Stream for Variable Expense and Non-Lease Payments." See Examples at FASB: 842-10-55-225 through 231.

(IFRS 16: Appendix A, Page 18):

Variable Expenses: Variable lease payments are defined as payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date (Start Date), other than the passage of time.

1. IFRS only (IFRS 16: Paragraph 42(b)), each time there is a change in the receipts resulting from a change in the reference index or rate, revise the Lease Receipts to remeasure the lease receivable to include this change (Use Revision tab)

(FASB: 842, Page 11/IFRS 16: Paragraphs 12-16):

Nonlease Components: Topic 842 requires an entity to separate the lease components from the nonlease components (for example, maintenance services or other activities that transfer a good or service to the customer) in a contract. Although this was a requirement in previous GAAP, Topic 842 provides more guidance on how to identify and separate components than previous GAAP. Only the lease components must be accounted for in accordance with Topic 842. The consideration in the contract is allocated to the lease and nonlease components on a relative standalone price basis for lessees. Consideration attributable to nonlease components is not a Lease Payment and, therefore, is not included in the measurement of lease assets or lease liabilities. Entities should account for nonlease components in accordance with other applicable Topics.

As a practical expedient, a lessee may elect, by class of underlying asset, not to separate nonlease components from lease components, and instead account for each lease component and any associated nonlease components as a single lease component.

(FASB: 842-10-30-1/IFRS 16: Paragraphs 18-20):
Lease Term is the noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following:
a. Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option
b. Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option (i.e., bypassing an early termination option)
c. Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.

(FASB: 842-10-55-26):
At the commencement date, an entity assesses whether the lessee is reasonably certain to exercise or not to exercise an option by considering all economic factors relevant to that assessment—contract-based, asset-based, market-based, and entity-based factors. An entity’s assessment often will require the consideration of a combination of those factors because they are interrelated. Examples of these economic factors include but are not limited to:

a. Contractual terms and conditions for the optional periods compared with current market rates, such as:

1. The amount of Lease Payments in any optional period

2. The amount of any variable lease payments or other contingent payments, such as payments under termination penalties and residual value guarantees

3. The terms and conditions of any options that are exercisable after initial optional periods (for example, the terms and conditions of a purchase option that is exercisable at the end of an extension period at a rate that is currently below market rates).

b. Significant leasehold improvements that are expected to have significant economic value for the lessee when the option to extend or terminate the lease or to purchase the underlying asset becomes exercisable.

c. Costs relating to the termination of the lease and the signing of a new lease, such as negotiation costs, relocation costs, costs of identifying another underlying asset suitable for the lessee’s operations, or costs associated with returning the underlying asset in a contractually specified condition or to a contractually specified location.

d. The importance of that underlying asset to the lessee’s operations, considering, for example, whether the underlying asset is a specialized asset and the location of the underlying asset.

(IFRS 16: Paragraphs B37-B40):
The shorter the non-cancellable period of a lease, the more likely a lessee is to exercise an option to extend the lease or not to exercise an option to terminate the lease. This is because the costs associated with obtaining a replacement asset are likely to be proportionately higher the shorter the non-cancellable period.

A lessee’s past practice regarding the period over which it has typically used particular types of assets (whether leased or owned), and its economic reasons for doing so, may provide information that is helpful in assessing whether the lessee is reasonably certain to exercise, or not to exercise, an option. For example, if a lessee has typically used particular types of assets for a particular period of time or if the lessee has a practice of frequently exercising options on leases of particular types of underlying assets, the lessee shall consider the economic reasons for that past practice in assessing whether it is reasonably certain to exercise an option on leases of those assets.

(FASB: 842-10-25-2): A lessee shall classify a lease as a finance lease when the lease meets any of the following criteria at lease commencement:

a. The lease transfers ownership of the underlying asset to the lessee by the end of the Lease Term.

b. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

c. The Lease Term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date (Start Date) falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.

(FASB: 842-10-55-2 (a)): Major part defined as 75% of the economic life is deemed a reasonable approach.

(FASB: 842, Page 23): Economic Life is either the period over which an asset is expected to be economically usable by one or more users or the number of production or similar units expected to be obtained from an asset by one or more users. Economic life is longer useful life (term used to determine ROU Asset Life) because it is the period by which all of the users can utilize the asset, while useful life is the period by which the lessee (only) will utilize the asset.

d. The present value of the sum of the Lease Payments and any residual value guaranteed by the lessee that is not already reflected in the Lease Payments in accordance with paragraph 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

(FASB: 842-10-55-2 (c)): Substantially all defined as 90% of the fair value of the underlying asset is deemed a reasonable approach.

e. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the Lease Term.

(FASB: 842-10-25-1): An entity shall classify each separate lease component at the commencement date. An entity shall not reassess the lease classification after the commencement date unless the contract is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8. In addition, a lessee also shall reassess the lease classification after the commencement date if there is a change in the lease term or the assessment of whether the lessee is reasonably certain to exercise an option to purchase the underlying asset.

(FASB: 842-10-25-3):
When none of the criteria in paragraph 842-10-25-2 are met:
a. A lessee shall classify the lease as an operating lease.
b. A lessor shall classify the lease as either a direct financing lease or an operating lease. A lessor shall classify the lease as an operating lease unless both of the following criteria are met, in which case the lessor shall classify the lease as a direct financing lease:

1. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) and/or
   any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset.

2. It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.

(IFRS: Paragraph 63)
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are:
(a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
(b) the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the
inception date, that the option will be exercised;
(c) the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;
(d) at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and
(e) the underlying asset is of such a specialised nature that only the lessee can use it without major modifications.

(IFRS: Paragraph 64)
Indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease are:
(a) if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee;
(b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease); and
(c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.

(IFRS: Paragraph 65)
The examples and indicators in paragraphs 63–64 are not always conclusive. If it is clear from other features that the lease does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset, the lease is classified as an operating lease. For example, this may be the case if ownership of the underlying asset transfers at the end of the lease for a variable payment equal to its then fair value, or if there are variable lease payments, as a result of which the lessor does not transfer substantially all such risks and rewards.

(FASB: 842-10-25-2):
The Lease Term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date (Start Date) falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.

(FASB: 842-10-55-2 (a)):
Major part defined as 75% of the economic life is deemed a reasonable approach.

(FASB: 842, Page 23):
Economic Life is either the period over which an asset is expected to be economically usable by one or more users or the number of production or similar units expected to be obtained from an asset by one or more users. Economic life is longer useful life (term used to determine ROU Asset Life) because it is the period by which all of the users can utilize the asset, while useful life is the period by which the lessee (only) will utilize the asset.

(FASB: 842-10-25-2):
The present value of the sum of the Lease Payments and any residual value guaranteed by the lessee that is not already reflected in the Lease Payments in accordance with paragraph 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

(FASB: 842-10-55-2 (c)):
Substantially all defined as 90% of the fair value of the underlying asset is deemed a reasonable approach.

(FASB: 842-10-55-26):
At the commencement date, an entity assesses whether the lessee is reasonably certain to exercise or not to exercise an option by considering all economic factors relevant to that assessment—contract-based, asset-based, market-based, and entity-based factors. An entity’s assessment often will require the consideration of a combination of those factors because they are interrelated. Examples of these economic factors include but are not limited to:

a. Contractual terms and conditions for the optional periods compared with current market rates, such as:

1. The amount of Lease Payments in any optional period

2. The amount of any variable lease payments or other contingent payments, such as payments under termination penalties and residual value guarantees

3. The terms and conditions of any options that are exercisable after initial optional periods (for example, the terms and conditions of a purchase option that is exercisable at the end of an extension period at a rate that is currently below market rates).

b. Significant leasehold improvements that are expected to have significant economic value for the lessee when the option to extend or terminate the lease or to purchase the underlying asset becomes exercisable.

c. Costs relating to the termination of the lease and the signing of a new lease, such as negotiation costs, relocation costs, costs of identifying another underlying asset suitable for the lessee’s operations, or costs associated with returning the underlying asset in a contractually specified condition or to a contractually specified location.

d. The importance of that underlying asset to the lessee’s operations, considering, for example, whether the underlying asset is a specialized asset and the location of the underlying asset.

(IFRS 16: Paragraphs B37-B40):
The shorter the non-cancellable period of a lease, the more likely a lessee is to exercise an option to extend the lease or not to exercise an option to terminate the lease. This is because the costs associated with obtaining a replacement asset are likely to be proportionately higher the shorter the non-cancellable period.

A lessee’s past practice regarding the period over which it has typically used particular types of assets (whether leased or owned), and its economic reasons for doing so, may provide information that is helpful in assessing whether the lessee is reasonably certain to exercise, or not to exercise, an option. For example, if a lessee has typically used particular types of assets for a particular period of time or if the lessee has a practice of frequently exercising options on leases of particular types of underlying assets, the lessee shall consider the economic reasons for that past practice in assessing whether it is reasonably certain to exercise an option on leases of those assets.

Modification: This is an amendment to a lease (including full or partial lease termination).

• Full Termination: If a Term of 1 month is entered, the ROU Asset & Lease Liability will be reduced to zero on the Revision Date, with any difference booked to the Gain/Loss Account selected in “GL Accounts” tab. 

• Partial Termination is a reduction in scope (e.g., reducing square feet of an office lease). See below for guidance on steps for completion.

If the two criteria below are not met, you shall edit lease and select “Add Revision” button on the top right of the screen. An entity shall account for initial direct costs, lease incentives in the same manner as those items would be accounted for in connection with a new lease.

Do not adjust the accounting for the original lease through the end of its term; instead, create a new lease for the Modification (amendment) if the following exist:

1. Modification grants an additional right of use not in the original lease (e.g., original lease includes 10,000 sq. ft. and amendment includes an additional 2,000 sq. ft.).

2. Lease payments increased commensurate with standalone price of additional right of use.

Remeasurement: Reassess lease due to an event (i.e., no contract amendment). A remeasurement comes in the following three forms:

1. Contingency resolved such that variable lease payments become fixed

2. Change in amounts probable under Residual Value Guarantee

3. Reassessment of: a) lease term or b) purchase option ONLY IF one of the following events occurs:

   1. significant event/change in circumstances that is in control of lessee that affects whether they exercise or not exercise an option*

   2. event occurs (that was previously written into the contract) that obliges the lessee to exercise or not exercise an option*

   3. lessee elects to exercise an option* (when previously determined it wouldn't)

   4. lessee elects to not to exercise an option* (when previously determined it would)

• option can be an early termination option, renewal option or option to purchase the underlying asset

IFRS 16 ONLY: Change in index: Change in payments due to a change in an index (e.g., cost of living adjustment) used to determine those payments.

IFRS 16 ONLY: Change in interest rate: Change in payments due to payments tied to a floating interest rate (e.g., LIBOR) used to determine those payments.

Impairment of ROU Asset: ROU Asset will be reduced to the value entered in the Revision Information tab with an adjustment recognized in a Gain/Loss Account. If Impairment & Modification occur at the same time, enter a Modification revision before the Impairment revision.

Derecognize ROU Asset under certain subleases: The original lessee (as sublessor) shall continue to account for the original lease in one of the following ways:

1. If the sublease is classified as an operating lease, account for the original lease as you did before the sublease.

2. If the sublease is accounted for as a sales-type lease or direct financing lease, account for the original lease by derecognizing the ROU Asset and accounting for the Liability as it did before the sublease. In the software, after selecting “Add Revision,” you shall input a ROU Asset Life = 0, which causes the value of the ROU Asset to be transferred to a Gain/Loss Account. You will reverse the Gain/Loss Account as part of the initial entry as a Lessor of the subleased asset (outside of scope of the software).  

Change lease data in the middle of a lease: This Revision is not part of the technical guidance, but rather a practical consideration in which you can change a parameter of the lease (e.g., Location, GL Accounts) in the middle of the lease, allowing lessee to report on that lease differently from the date of the Revision.

Revision Pro Tip: After selecting “Add Revision” in edit mode, for the three parameters below:

1. Update values as of the date of the Revision, indicated with “Update” below.

2. Software will carryforward the the same values from the previous version of the lease (i.e., do not reassess values as of the date of the Revision), indicated with “S” which stands for Same below.

Lessee Revision Types:

(1)  No technical guidance exists as to updating Historical fx Rate (when local currency is different than functional currency) for a Revision, other than a SEC inquiry response. The SEC response is to follow the same technical guidance as to when to update the Discount Rate or reassess Classification (see Discount & Classification columns in the table above and technical references in (2) & (3) below).

(2) (FASB: 842-20-35-5 /IFRS 16: Paragraphs 40,43)

(3) (FASB: 842-10-25-1)

Technical Guidance: The technical guidance for all types of Revisions are too numerous to restate, but referenced below are the main provisions:

ASC 842:
Modifications: (842-10-25-8 to 14)
Remeasurements: (842-10-35-1 to 5, 842-10-55-28 to 29)
Impairment: (842-20-35-9 to 11, 842-20-25-7)
Derecognize ROU Asset under certain subleases: (842-20-35-14)

IFRS 16:
Modifications/Remeasurements: (Paragraphs 39 to 46)
Impairment: (Paragraph 33)
Change in Index/Change in Interest Rate: (Paragraphs 42 to 43)
Derecognize ROU Asset under certain subleases: (BC 233)

Modification: This is an amendment to a lease (including full or partial lease termination).

• Full Termination: If a Term of 1 month is entered, the ROU Asset & Lease Liability will be reduced to zero on the Revision Date, with any difference booked to the Gain/Loss Account selected in “GL Accounts” tab. 

• Partial Termination is a reduction in scope (e.g., reducing square feet of an office lease). See below for guidance on steps for completion.

If the two criteria below are not met, you shall edit lease and select “Add Revision” button on the top right of the screen. An entity shall account for initial direct costs, lease incentives in the same manner as those items would be accounted for in connection with a new lease.

Do not adjust the accounting for the original lease through the end of its term; instead, create a new lease for the Modification (amendment) if the following exist:

1. Modification grants an additional right of use not in the original lease (e.g., original lease includes 10,000 sq. ft. and amendment includes an additional 2,000 sq. ft.).

2. Lease payments increased commensurate with standalone price of additional right of use.

Remeasurement: Reassess lease due to an event (i.e., no contract amendment). A remeasurement comes in the following three forms:

1. Contingency resolved such that variable lease payments become fixed

2. Change in amounts probable under Residual Value Guarantee

3. Reassessment of: a) lease term or b) purchase option ONLY IF one of the following events occurs:

   1. significant event/change in circumstances that is in control of lessee that affects whether they exercise or not exercise an option*

   2. event occurs (that was previously written into the contract) that obliges the lessee to exercise or not exercise an option*

   3. lessee elects to exercise an option* (when previously determined it wouldn't)

   4. lessee elects to not to exercise an option* (when previously determined it would)

• option can be an early termination option, renewal option or option to purchase the underlying asset

IFRS 16 ONLY: Change in index: Change in payments due to a change in an index (e.g., cost of living adjustment) used to determine those payments.

IFRS 16 ONLY: Change in interest rate: Change in payments due to payments tied to a floating interest rate (e.g., LIBOR) used to determine those payments.

Impairment of ROU Asset: ROU Asset will be reduced to the value entered in the Revision Information tab with an adjustment recognized in a Gain/Loss Account. If Impairment & Modification occur at the same time, enter a Modification revision before the Impairment revision.

Derecognize ROU Asset under certain subleases: The original lessee (as sublessor) shall continue to account for the original lease in one of the following ways:

1. If the sublease is classified as an operating lease, account for the original lease as you did before the sublease.

2. If the sublease is accounted for as a sales-type lease or direct financing lease, account for the original lease by derecognizing the ROU Asset and accounting for the Liability as it did before the sublease. In the software, after selecting “Add Revision,” you shall input a ROU Asset Life = 0, which causes the value of the ROU Asset to be transferred to a Gain/Loss Account. You will reverse the Gain/Loss Account as part of the initial entry as a Lessor of the subleased asset (outside of scope of the software).  

Change lease data in the middle of a lease: This Revision is not part of the technical guidance, but rather a practical consideration in which you can change a parameter of the lease (e.g., Location, GL Accounts) in the middle of the lease, allowing lessee to report on that lease differently from the date of the Revision.

Revision Pro Tip: After selecting “Add Revision” in edit mode, for the three parameters below:

1. Update values as of the date of the Revision, indicated with “Update” below.

2. Software will carryforward the the same values from the previous version of the lease (i.e., do not reassess values as of the date of the Revision), indicated with “S” which stands for Same below.

Lessor Revision Types:

(1)  No technical guidance exists as to updating Historical fx Rate (when local currency is different than functional currency) for a Revision, other than a SEC inquiry response. The SEC response is to follow the same technical guidance as to when to update the Discount Rate or reassess Classification (see Discount & Classification columns in the table above and technical references in (2) & (3) below).

(2) (FASB: 842-20-35-5 /IFRS 16: Paragraphs 40,43)

(3) (FASB: 842-10-25-1)

Technical Guidance: The technical guidance for all types of Revisions are too numerous to restate, but referenced below are the main provisions:

ASC 842:
Modifications: (842-10-25-8 to 14)
Remeasurements: (842-10-35-1 to 5, 842-10-55-28 to 29)
Impairment: (842-20-35-9 to 11, 842-20-25-7)
Derecognize ROU Asset under certain subleases: (842-20-35-14)

IFRS 16:
Modifications/Remeasurements: (Paragraphs 39 to 46)
Impairment: (Paragraph 33)
Change in Index/Change in Interest Rate: (Paragraphs 42 to 43)
Derecognize ROU Asset under certain subleases: (BC 233)

Modification: This is an amendment to a lease (including full or partial lease termination).

• Full Termination: If a Term of 1 month is entered, the ROU Asset & Lease Liability will be reduced to zero on the Revision Date, with any difference booked to the Gain/Loss Account selected in “GL Accounts” tab. 

• Partial Termination is a reduction in scope (e.g., reducing square feet of an office lease). See below for guidance on steps for completion.

If the two criteria below are not met, you shall edit lease and select “Add Revision” button on the top right of the screen. An entity shall account for initial direct costs, lease incentives in the same manner as those items would be accounted for in connection with a new lease.

Do not adjust the accounting for the original lease through the end of its term; instead, create a new lease for the Modification (amendment) if the following exist:

1. Modification grants an additional right of use not in the original lease (e.g., original lease includes 10,000 sq. ft. and amendment includes an additional 2,000 sq. ft.).

2. Lease payments increased commensurate with standalone price of additional right of use.

Remeasurement: Reassess lease due to an event (i.e., no contract amendment). A remeasurement comes in the following three forms:

1. Contingency resolved such that variable lease payments become fixed

2. Change in amounts probable under Residual Value Guarantee

3. Reassessment of: a) lease term or b) purchase option ONLY IF one of the following events occurs:

   1. significant event/change in circumstances that is in control of lessee that affects whether they exercise or not exercise an option*

   2. event occurs (that was previously written into the contract) that obliges the lessee to exercise or not exercise an option*

   3. lessee elects to exercise an option* (when previously determined it wouldn't)

   4. lessee elects to not to exercise an option* (when previously determined it would)

• option can be an early termination option, renewal option or option to purchase the underlying asset

IFRS 16 ONLY: Change in index: Change in payments due to a change in an index (e.g., cost of living adjustment) used to determine those payments.

IFRS 16 ONLY: Change in interest rate: Change in payments due to payments tied to a floating interest rate (e.g., LIBOR) used to determine those payments.

Impairment of ROU Asset: ROU Asset will be reduced to the value entered in the Revision Information tab with an adjustment recognized in a Gain/Loss Account. If Impairment & Modification occur at the same time, enter a Modification revision before the Impairment revision.

Derecognize ROU Asset under certain subleases: The original lessee (as sublessor) shall continue to account for the original lease in one of the following ways:

1. If the sublease is classified as an operating lease, account for the original lease as you did before the sublease.

2. If the sublease is accounted for as a sales-type lease or direct financing lease, account for the original lease by derecognizing the ROU Asset and accounting for the Liability as it did before the sublease. In the software, after selecting “Add Revision,” you shall input a ROU Asset Life = 0, which causes the value of the ROU Asset to be transferred to a Gain/Loss Account. You will reverse the Gain/Loss Account as part of the initial entry as a Lessor of the subleased asset (outside of scope of the software).  

Change lease data in the middle of a lease: This Revision is not part of the technical guidance, but rather a practical consideration in which you can change a parameter of the lease (e.g., Location, GL Accounts) in the middle of the lease, allowing lessee to report on that lease differently from the date of the Revision.

Revision Pro Tip: After selecting “Add Revision” in edit mode, for the three parameters below:

1. Update values as of the date of the Revision, indicated with “Update” below.

2. Software will carryforward the the same values from the previous version of the lease (i.e., do not reassess values as of the date of the Revision), indicated with “S” which stands for Same below.

Lessor Revision Types:

(1)  No technical guidance exists as to updating Historical fx Rate (when local currency is different than functional currency) for a Revision, other than a SEC inquiry response. The SEC response is to follow the same technical guidance as to when to update the Discount Rate or reassess Classification (see Discount & Classification columns in the table above and technical references in (2) & (3) below).

(2) (FASB: 842-20-35-5 /IFRS 16: Paragraphs 40,43)

(3) (FASB: 842-10-25-1)

Technical Guidance: The technical guidance for all types of Revisions are too numerous to restate, but referenced below are the main provisions:

ASC 842:
Modifications: (842-10-25-8 to 14)
Remeasurements: (842-10-35-1 to 5, 842-10-55-28 to 29)
Impairment: (842-20-35-9 to 11, 842-20-25-7)
Derecognize ROU Asset under certain subleases: (842-20-35-14)

IFRS 16:
Modifications/Remeasurements: (Paragraphs 39 to 46)
Impairment: (Paragraph 33)
Change in Index/Change in Interest Rate: (Paragraphs 42 to 43)
Derecognize ROU Asset under certain subleases: (BC 233)