Remeasurement due to modification

Remeasurement of the lease liability occurs when the effective date of the contract modification is not accounted as a separate contract. One or more of these changes must also occur:

• The lease term changes can extend or reduce unless changes occur by exercising an option in the lease.
• A change whether the lessee exercises to purchase the asset.
• The lease modification fully or partially terminates an existing lease. For example, the modification can reduce the assets included in the lease.

The remaining lease obligation and the lease liability is remeasured using a discount rate from the effective date of the modification. If the carrying amount of the asset is reduced to less than zero, then the difference is booked to profit or loss.