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i saw in the scope of standard that any building leased out under an operating lease, will be treated as Investment property under IAS 40……
but if its leased out under financial lease..then it will come under IAS 16.can u explain what is the difference between operating n financial lease…because of which it can come either under ias 40 or ias 16
Hi,
If it is an operating lease then we still have the risks and rewards of ownership and the asset is held in our books, hence will be held under IAS 40.
If it is under a finance lease then the asset is not ours and the person leasing it from us will recognise it in their books and treat it as PPE.
Thanks
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