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Lease Term – Clause with an Option to Terminate

This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.

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October 30, 2021 at 8:17 pm #639509
siwela1
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- Topics: 24
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Example:-
A lease contract is for 5 years.
The lease contains a clause to terminate the lease 2 years before its initial end. The lessee is reasonably certain NOT to exercise this option.
So what is the lease term?
October 31, 2021 at 7:25 am #639522
Stephen Widberg
Keymaster
- Topics: 16
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i would assume 5 years.
IFRS 16:
The non-cancellable period for which a lessee has the right to use an underlying asset, plus:
a) periods covered by an extension option if exercise of that option by the lessee is reasonably certain; and
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