Lease Components

FRS 102 treatment of incentives, initial direct costs, restoration obligations, options, peppercorn leases, modifications, and early termination.

Lease Incentives (FRS 102): Rent-Free, Fit-Outs

FRS 102 treatment of rent-free periods, fit-out contributions, cash payments. Day 1 incentives reduce ROU; future ones reduce the lease liability.

Legal fees, broker commissions, and other initial direct costs are capitalised into the FRS 102 ROU asset. Which qualify, which don't, the journal.

Restoration cost and dilapidations under FRS 102. Make-good obligations sit in the ROU asset at PV, matching liability under FRS 102 Section 21.

FRS 102 requires extension periods in the lease term if reasonably certain to exercise. How options affect lease liability and ROU asset.

Termination penalties are in the FRS 102 lease liability if the lease term reflects early termination. Accounting treatment and how Lease102 handles.

Peppercorn rent (£1/year) needs special FRS 102 Section 20 treatment: recognise ROU at fair value, low-value exemption, zero-payment lease handling.

English quarter days: Lady Day (25 Mar), Midsummer (24 Jun), Michaelmas (29 Sep), Christmas (25 Dec). Plus Scottish and Irish dates, FRS 102 use.

Service charges are typically excluded from FRS 102 lease liability as non-lease components. How to separate lease and service charge elements.

Rent deposits are financial assets, not lease components. The correct FRS 102 accounting treatment for deposits held by landlords.

FRS 102 lease modifications (term extensions, rent changes, scope changes) trigger remeasurement of lease liability and ROU asset (20.54-20.58).

Early lease termination requires derecognising the FRS 102 lease liability and ROU asset. Lease102 calculates the gain/loss and the journal.

ROU assets are subject to FRS 102 Section 27 impairment testing. Identify impairment indicators, calculate the charge, adjust depreciation.