IV96394: Revision to ROU asset when modifying “Finance” RE lease


When a “Finance” (or “Capital”) lease is modified, the new ROU asset balance should be calculated in the same way as future accounting “Operating” lease modifications, that is, the amount of change in the liability balance is added to (or subtracted from) the prior-period ROU asset balance immediately preceding the modification.

Note that this calculation should mirror the calculations that were implemented in TRIRIGA 10.5.2 for future “Operating” lease modifications. Currently, we see that the asset balance is set equal to the re-measured liability balance upon a modification.

Moving forward, when a “Finance” (or “Capital”) lease is modified, the new right-of-use (ROU) asset balance is now calculated correctly. The amount of change in the liability balance is added to (or subtracted from) the prior-period right-of-use (ROU) asset balance immediately preceding the modification.

[Admin: To see other related posts, use the ROU tag.]

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