IFRS 16 Leases - Shark Ltd. rents a property downtown in order to use it as its new „flaghip-store“. • The commencement date of the lease contract is January 1 st, 2020. • The contract period is 10 years (until December 31st 2029; no extension or termination options). • The lease payments agreed under the rental agreement amount to € 100,000 per year and are due on January 1 st for each year of the lease term (up-front annual lease payments). • The implicit interest rate assumed in the lease is unknown to Shark Ltd. • Shark Ltd.‘s incremental borrowing rate is 4.75 %. • In addition, Shark Ltd. has to pay an up-front compensation payment (€ 15,000) to the previous lessee of the store in order to move in at the desired date. Required: • Determine the relevant lease payments • Calculate the right-of-use asset and the lease liability at initial recognition • Present the subsequent measurement of both the right-of-use asset and the lease liability
IFRS 16 Leases - Shark Ltd. rents a property downtown in order to use it as its new „flaghip-store“. • The commencement date of the lease contract is January 1 st, 2020. • The contract period is 10 years (until December 31st 2029; no extension or termination options). • The lease payments agreed under the rental agreement amount to € 100,000 per year and are due on January 1 st for each year of the lease term (up-front annual lease payments). • The implicit interest rate assumed in the lease is unknown to Shark Ltd. • Shark Ltd.‘s incremental borrowing rate is 4.75 %. • In addition, Shark Ltd. has to pay an up-front compensation payment (€ 15,000) to the previous lessee of the store in order to move in at the desired date. Required: • Determine the relevant lease payments • Calculate the right-of-use asset and the lease liability at initial recognition • Present the subsequent measurement of both the right-of-use asset and the lease liability
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