Re-measurement of the Right-of-Use Asset
The re-measurement amount for the lease liability matches the adjustment made to the right-of-use asset. The calculation for the lease modification adjustment is the same for finance and operating leases. The write-down adjustment is calculated as the difference between the following:
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The lease liability balance at the effective date of modification
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The new net present value using the modified lease terms
If you modify an operating lease asset, the RV is calculated as the total interest of the modified lease, shown as a negative amount.
You should use Straight Line Remaining Depreciation Method because the depreciation after modification is computed based on the current net book value or remaining life. If you use other depreciation methods, depreciation after modification is calculated as Current Cost divided by the Asset Life.