Theory and Practice
✔ Applies to US GAAP (ASC 842) Finance Leases
✔ Applies to US GAAP (ASC 842) Operating Leases
✔ Applies to IFRS (IFRS 16)
✔ Applies to UK GAAP (FRS 102)
In IFRS, US GAAP and UK GAAP, if a modification fully terminates a lease (early termination without replacement), the accounting is similar: remove the entire ROU asset and liability, with any difference flowing to gain/loss
| Account | Debit | Credit |
|---|---|---|
| Lease Liability | $220,000 | |
|
ROU Asset Accumulated Depreciation | $100,000 | |
| ROU Asset | $300,000 | |
| Gain/Loss on Termination of Lease | $20,000 | |
| Remove the liability for the terminated lease and derecognize the corresponding ROU asset. Here, liability reduction ($220k) exceeds asset reduction ($200k), so a $20k gain is recorded in the Income Statement. | ||
Doing it in Sage Intacct Lease Accounting
Follow the Lease Termination steps.