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A lessee should reassess whether a short-term lease continues to qualify for the short-term lease measurement and recognition exemption when any of the following events occur:
  • The lease term changes because it becomes reasonably certain that the lessee will exercise its renewal option such that, after the change, the remaining lease term extends more than 12 months from the end of the previously-determined lease term
  • The lease term changes because it becomes reasonably certain that the lessee will not exercise a termination option such that, after the change, the remaining lease term extends more than 12 months from the end of the previously determined lease term
  • The lessee becomes reasonably certain to exercise its option to purchase the underlying asset
If the lease no longer meets the requirements for the short-term lease measurement and recognition exemption, the lessee should apply the guidance discussed in LG 3 to determine the lease classification.
See LG 2.2.1 for information on the short-term lease measurement and recognition exemption.
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