AASB 16 Leases 44-46B,B43-B47: Account for a modification as a separate lease when it adds a right of use at a commensurate price; otherwise reallocate, redetermine the term and remeasure at a revised rate, recognising a gain or loss on scope decreases, with the pandemic rent concession expedient

What does 44-46B,B43-B47 require?

A lease modification (a change in scope or consideration not in the original terms) is a separate lease when it adds rights over one or more further underlying assets and the consideration rises by an amount in line with the stand-alone price of the addition adjusted for the contract's circumstances. Any other modification is accounted for at its effective date by allocating the modified consideration, determining the modified lease term and remeasuring the liability at a revised discount rate; for a decrease in scope the asset is written down for the partial or full termination with the gain or loss in profit or loss, and for every other modification the asset is adjusted by the remeasurement. The expedient for rent concessions that flowed directly from the covid-19 pandemic, affecting payments that fell due up to 30 June 2022 with substantially unchanged or lower total consideration and no other substantive change, allowed a lessee not to assess whether the concession was a modification.