Lease Amendments for Partial Scope Changes

Modify leases to increase or partially reduce the lessee's right to the underlying assets. Lease modifications to change scope include creating a new version of the lease, adjusting the right-of-use asset and lease liability on a basis proportionate to the partial scope change, and maintaining an audit of the changes.

An amendment to increase or partially reduce scope is accounted by remeasuring the lease liability and adjusting the carrying amount of the right-of-use asset. Additionally, a gain or loss is recognized when there is a decrease in scope. Scope decreases under IFRS 16 and Japanese GAAP are calculated based on the percentage of reduction in the leased area or units, whereas under ASC 842, they may optionally be calculated based on the percentage of reduction in lease liability.

The unit-based scope decrease method may be configured separately for primary and secondary standards under system options.

Define System Options for Unit-Based Scope Decrease Method

To modify leases to increase or partially reduce scope:

1. Initiate action to Amend Lease for Scope Increase or Scope Decrease.
2. In the Asset Details page, enter the new area or new units.
3. Update payments as required.
4. Validate, generate schedules, and activate the amendment.

Alternatively, use the Lease Amendment Import utility to import a batch of partial scope increase or scope decrease amendments directly into the desired status: Draft, Validated, Complete, or Booked.

The following screenshots describe the process of amending a lease for partial scope decrease of leased area or units:

Amend Lease to Partially Reduce the Leased Area

Amend Lease to Partially Reduce the Units of Leased Equipment

Business benefits include:

• Ensure compliance with ASC 842, IFRS 16, and Japanese GAAP lease accounting for partial lease terminations.
• Increase operational efficiency with streamlined lease amendments.

Steps to Enable

Use the Opt In UI to enable this feature. For instructions, refer to the Optional Uptake of New Features section of this document.

Offering: Financials  No Longer Optional From: Update 24D

Access Requirements

You do not need any new role or privilege access to set up and use this feature.