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  • Thomas Tsang

Remeasurement of lease

When lease is remeasured due to expected increase in lease payment, the lease liability is remeasured based on new lease payment without changing the original discount rate. The different in remeasured lease liability is adjusted to right of use asset. Then, the Net book value of the adjusted ROU is depreciated over the remaining life of the assets.

Note that remeasurement is not modification of lease. For example, the lease rental from JTC in Singapore will be increased every year, you will need to remeasure it every year but using the same discount rate.

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