(paragraphs 79-80 and 87)

BC238 IFRS 16 requires a lessor - like a lessee - to account for a modification to a finance lease as a separate lease if:

(a) the modification increases the scope of the lease by adding the right for the lessee to use one or more underlying assets; and

(b) the consideration received for the lease increases by an amount commensurate with the stand-alone price for the increase in scope.

This is because, in the IASB’s view, such a modification in substance represents the creation of a new lease that is separate from the original lease. This requirement is substantially aligned with equivalent requirements in IFRS 15 that require a seller to account for modifications that add distinct goods or services as separate contracts if those additional goods or services are priced commensurately with their stand-alone selling price.