(paragraphs 44-46B)

BC200 IAS 17 did not address the accounting for lease modifications. The IASB decided that it would be useful to include a general framework for accounting for lease modifications in IFRS 16 because modifications occur frequently for many types of leases.

BC201 The IASB decided to define a lease modification as a change in the scope of a lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term), or the consideration for a lease, that was not part of the original terms and conditions of the lease. In defining lease modifications, the IASB differentiated between scenarios resulting in the remeasurement of existing lease assets and lease liabilities that are not lease modifications (for example, a change in lease term resulting from the exercise of an option to extend the lease when that option was not included in the original lease term) and those resulting in a lease modification (for example, a change in the lease term resulting from changes to the terms and conditions of the original lease).