If you have a break clause in your Agreement, this may have been recorded for lease management purposes in Nomos One using a Break Clause Event. This article will go through the four options presented at Step 2 of the event completion process.
Please note: The Break Clause Event should only be used for lease management purposes, not for lease accounting. If the break clause needs to be recognised for IFRS 16 Reporting purposes, it should have been recorded using the method explained in this article, rather than using the Break Clause Event.
Completing a Break Clause Event
Select the Break Clause Event you would like to complete and click Start Event. You will then have four different options for how to complete the Event, presented in Step 2.
If you feel that these options do not meet your needs of a break clause, please reach out to our Support Team at support@nomosone.com, or by clicking “Contact Support” in the top right corner of this article.
No - The Agreement will not expire
Use this option if you are not breaking the lease at this date. To complete the Event:
- Select No - The Agreement will not expire.
- Click Next.
- Add any relevant documentation, or, if you do not have any, select No Documentation and provide a reason.
- Complete the Event.
Please note: Using this option will have no effect on the remainder of your Agreement, from both a lease management perspective and a lease accounting perspective.
Yes - The Agreement will be expired on the next renewal date
Using this option will impact future Events on the Event Timeline. As stated, the system will locate the closest future Renewal Event, change it to an Expiry Event, and delete any events that were scheduled to occur after that located Renewal Event.
Using this option will significantly impact the remainder of your Agreement, from both a lease management perspective and a lease accounting perspective because it deletes events that were scheduled at the Commencement of the Agreement. If this Agreement is included in IFRS 16 reporting, you should not use this Break Clause completion option, as it may impact your financial balances. Instead, refer to this article to learn how to capture a break clause for IFRS 16 reporting.
As an example, this Agreement has a Break Clause Event on the 30th of September, 2024. The next Renewal Event is on the 15th of September, 2026, and the final Expiry Event is on the 14th of September, 2029. There are also Market Rent Reviews on the 15th of September in 2025, 2026, 2027, and 2028.
If we complete the Break Clause using the option “Yes - The Agreement will be expired on the next renewal date”, the system will change the Renewal Event on the 15th of September 2026 to an Expiry Event. It will also delete the Market Rent Reviews on the 15th of September 2026, 2027, and 2028, and the Expiry Event on the 14th of September 2029. As Events are being deleted, any IFRS 16 balances for this Agreement would be significantly impacted by completing the Break Clause Event using this option.
Yes - The Agreement will continue as a month to month Agreement or Yes - Other
These options have not been built into the system, so using them will have no effect on the remainder of your Agreement, from both a lease management perspective and a lease accounting perspective. If you need to represent a month to month arrangement for your Agreement, check out this article for instructions.
Nomos One does not provide or purport to provide any accounting, financial, tax, legal or any professional advice, nor does Nomos One purport to offer a financial product or service. Nomos One is not responsible or liable for any claim, loss, damage, costs or expenses resulting from your use of or reliance on these resource materials. It is your responsibility to obtain accounting, financial, legal and taxation advice to ensure your use of the Nomos One system meets your individual requirements.