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Use this type when a modification is not a separate contract, or when a reassessment event requires you to remeasure the lease liability. Typical events are:
  • An amendment that extends or shortens the lease term.
  • An amendment that changes the consideration only, such as a rent reduction.
  • An expansion where the additional rent is not priced at its standalone price.
  • Exercising a renewal, termination, or purchase option that was not previously reasonably certain (ASC 842-10-35-1).
  • A change in the amount probable of being owed under a residual value guarantee, or a contingency being resolved so variable payments become fixed (ASC 842-20-35-4(c) and (d)).
Complete the wizard using the modification effective date, the general ledger start date, the revised end date, and the updated discount rate. See Accounting Leases for field-by-field guidance. How Spacebase remeasures the lease. The wizard carries the previous snapshot’s balances forward to the effective date, including accrued or deferred rent, unamortized initial direct costs, unamortized incentives, and any ASC 420 liability. It then:
  1. Remeasures the lease liability as the present value of the remaining lease payments at the discount rate you enter, consistent with ASC 842-10-25-11 and ASC 842-20-35-5.
  2. Adjusts the ROU asset by the change in the lease liability, as required by ASC 842-10-25-12. No gain or loss is recognized unless the adjustment would reduce the ROU asset below zero.
  3. Reassesses classification as of the effective date (ASC 842-10-25-9). The summary step warns you if the classification differs from the previous snapshot. This step is skipped for IFRS 16 and GASB 87.
  4. Recalculates the schedule. For an operating lease, the remaining single lease cost is recognized straight-line over the remaining term. For a finance lease, the adjusted ROU asset is amortized straight-line and interest is recognized on the remeasured liability.
ASC 842-20-35-5 requires an updated discount rate for a modification or a lease term reassessment, but not when the remeasurement is due only to a residual value guarantee or a contingency being resolved. In those cases, keep the discount rate from the previous snapshot and record the reason in the required note.
Accumulated amortization. A company-level setting controls whether the previous snapshot’s accumulated amortization is closed against the ROU asset at the effective date (the default) or carried forward. The remeasured balances are the same under either method. Contact Spacebase support to change it. Short-term leases. A modification that extends the remaining term beyond 12 months means the lease no longer qualifies for the short-term election (ASC 842-20-25-3). Update the snapshot and recognize the lease liability and ROU asset from the effective date.