Dear Professional,
Can you please help me with this situation!
XYZ company has taken an office on lease from Sep 2019 till Sep 2024 with lessor ABC. A security deposit of INR 90 Lakhs was also paid (FAIR VALUE AT TIME OF RECORDING INR 20 Lakhs). The company has accounted lease based on IND AS 116 and a security deposit based on 109. Also, prepaid rent was transfer to ROU account and amortized appropriately.
But in Nov 2020, with appropriate notice (1 month) XYX decided to vacate the office due to the requirement of bigger office. The new office taken on the lease was in the same building with the same vendor as earlier. They entered into a new lease agreement for the new office.
Now in the case of security deposit XYX just had to pay INR 10 lakhs more as earlier deposit was continued for new space.
For the above scenarios, I have the following queries -
1. Do I need to reverse ROU and Lease liability as on the date of office vacation and the difference should be accounted in P and L account?
2. What about security deposit? How should I deal with the carrying value of security deposits pertaining to earlier lease?
CAclubindia
