The Soft4Lessee system helps to assess the lease term, taking into account:
- the contractual lease term
- the non-cancellable period
- lease renewal/ lease extension options the lessee is reasonably certain to exercise
- early termination options the lessee is reasonably certain to exercise
The estimated term becomes the base term lease liability calculation (the PV of the future payments over the term). The circumstances may change and the lessee may re-assess the lease extension or termination option at any point in time; the system will make a re-measurement to the lease liability accordingly.
The depreciation term for right-of-use would equal the estimated lease term (if the lessee does not get title of ownership to the asset at end of lease). In the case of a re-assessment of the lease term, the depreciation term will change in parallel (subject to ownership).