You are the financial controller at Marlow Retail.
Marlow signs a 6-year lease for a flagship store. Rent: $120,000/year, paid in arrears. Incremental borrowing rate: 6%. Marlow pays $15,000 in legal fees and receives a $20,000 fit-out incentive from the landlord. There is an option to extend for 4 more years at market rent.
IFRS 16.18 — include optional periods only if reasonably certain to be exercised.