What it is
A lease modification that is not a separate contract forces a remeasurement: the lessee updates the liability for the revised payments, term and discount rate and adjusts the right-of-use asset by the difference. A reduction in scope adds a first step, a proportionate reduction of the liability and asset with a gain or loss.
This worksheet runs both steps from the balances immediately before the modification. It compares before and after, floors the asset at zero with the excess flagged for profit or loss, and produces a balanced journal entry.
When to use it
- When a lease is extended, shortened or repriced and the change is not a separate contract.
- When part of the leased space or equipment is returned.
- When the auditor needs the calculation behind a modification entry.
What’s inside
- Inputs for the pre-modification balances, revised payments, term and discount rate
- Step 1 partial termination with the gain or loss
- Step 2 remeasurement of the remaining liability
- Before and after comparison and revised monthly cost
- Balanced journal entry with a check
Standard cited
This template follows ASC 842. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
When is a lease modification a separate contract?
When it grants an additional right of use and the added consideration reflects the standalone price of that right. A separate contract is accounted for on its own. Every other modification is remeasured, which is what this worksheet does.
Which discount rate applies after a modification?
The discount rate is updated as of the modification date. Enter the rate you determined at that date; the worksheet uses it for the remaining payments.
What happens if the asset would go below zero?
The asset is reduced to zero and the excess is recognized in profit or loss. The worksheet flags the case so you can book that amount.
Does the classification change?
Reassess it when the modification changes the substance of the lease. Select the classification after the modification and the worksheet shows the matching monthly cost.
Related templates
- ASC 842 Lease Journal Entries Workbook (Lessee)
- ASC 842 Lease Classification Test Worksheet
- ASC 842 Lease Schedule (Lessee)
- Disclosure Checklist: Leases (ASC 842), Lessee and Lessor
Last updated 11/05/2026. All free templates.