VARIABLE PAYMENTS and LEASE MODI

Question 1

How do you get the present value for variable payments?

Answer 1

PVOA/AD of first payment
PV OA/AD of second payment x PV of 1

etc.

Question 2

This is the scenario where there is a remeasurement of a lease liability.

Answer 2

Lease Modification

Question 3

The two scenarios that prompts Lease Modification.

Answer 3

1. Change in implicit rate
2. Change in lease term

Question 4

What is the effect on ROUA if:

Remeasured Amount > CA of LL

Answer 4

Increase in ROUA

Question 5

What is the effect on ROUA if:

Remeasured Amount < CA of LL

Answer 5

Decrease in ROUA

Question 6

What are the scenarios when you should use a revised discount rate in lease modification?

Answer 6

1. Change in lease term
2. Change in the assessment of an option to purchase an asset