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Lease term and useful life of leasehold improvements
In 2019, the IFRS Interpretations Committee discussed a question about how to determine the lease term for cancelable or renewable leases.
The IFRS Interpretations Committee discussed the determination of the lease term for cancelable or renewable leases and the useful life of non-removable leasehold improvements Entities may enter into cancelable or renewable leases that do not specify a particular term, but which continue indefinitely until one party gives notice to terminate. For example, an entity may enter into a contract that includes an initial non-cancelable period of two years and continues monthly until either party provides notification to terminate the lease. The request asked how the lease term should be determined and whether the useful life of any related non-removable leasehold improvements is limited to the lease term determined applying IFRS 16 Leases.