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Sir in the BPP text it’s written that when a lessee uses the fair value model to measure an investment property that is held as right of use asset, it must measure the right of use asset, not the underlying property at fair value.
What does this mean? I mean whats the difference between right of use asset and underlying property?
Hi,
It is saying that if you lease a property then you do not use the fair value of the property but use the discounted cash flows (right of use asset) to measure the property’s value, as this is based on what you are physically paying and is more reflective of the value to you the lessee.
Thanks
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