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If a ROU asset is impaired under a lease agreement, how does this affect the corresponding lease liability?
I have read the below technical article but struggling to get my head around when apply IAS 36 or IAS37.
Assume I am lessor.
At inception, ROU asset and lease liability is 400.
The next day I break the asset and it is not insured.
Dr P&L Cr ROU
But I still have to pay for it, so no adjustment to liability unless I can negotiate a settlement with lessor.
Here’s a quote from the article you highlighted:
“However, candidates should also appreciate that marks will be awarded for any discussion that is rational and logical, even though it doesn’t appear in the suggested solution.”
🙂
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