We were seeing discrepancies in the balances when compared with the client's legacy system. After our analysis we understood that closing balance or ending liability matches and only the opening balance does not match with legacy system.
Legacy system Opening Book Value: 5.812M
MSD Opening Book Value: 5.707M
More info: Found discrepancies when the balances were compared between legacy system and F&O because of the change in borrowing rate what we entered in F&O vs what we entered in their system. We tried changing the borrowing rate, it doesn't work
We want to know if we can terminate all the leases which were there in 2025 and re enter them starting from 2025 with adjusting opening balances with carry forward balances from 2024, we will then proceed to post the new journals based on the updated borrowing rate? And we will be posting in December 2025 meaning all the impact will be observed in December. Will it create any issues?
Kindly advise what is the best way to resolve our issue.
The initial lease liability is the present value of the future scheduled lease payments.
The right value to use is the sum of the liability + initial direct cost + Lease incentives + Lease prepayments - Dismantling costs:
The amount entered will affect the initial recognition journal entry.
Thank you,
Giorgio
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