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IFRS 16 Lease Term
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Saket Modi
20 years: Chartered accountant & educator
The lease term is the non-cancellable period. In this video, Saket outlines different circumstances which may affect the original estimated lease period.
The lease term is the non-cancellable period. In this video, Saket outlines different circumstances which may affect the original estimated lease period.
![](https://img-cdn.financeunlocked.com/videos/e9594f3b02cf4bfda11ea9aff2a49f2b2377fd26/IFRS_16_Leases_5_5_Lease_Term.jpg?ik-sdk-version=javascript-1.0.3)
IFRS 16 Lease Term
1 min 4 secs
Key learning objectives:
What is the lease term?
What are the reasons for the lessee to exercise the option?
Overview:
The lease term is the non-cancellable period. In this video, Saket outlines the economic incentives for the lessee to exercise, or not exercise the option. This may include the T&Cs for optional periods. The lease term may need to be reassessed at a later date due to changes in the circumstances which may affect the original estimated lease period.
What is the lease term?
The lease term is the non-cancellable period together with both:
- Periods covered by an option to extend the lease, if lessee is reasonably certain to exercise that option
- Periods covered by an option to terminate the lease, if lessee is reasonably certain not to exercise that option
What are the reasons for the lessee to exercise the option?
- Terms and conditions for optional periods compared with market rates
- Costs relating to termination of the lease or importance of underlying asset to lessee’s operations
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