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Hi,
“The third floor of an office building leased to Load plc’s subsidiary. The fifteen storey building is owned by Load plc and the third floor had been unoccupied for many years”
The answer says:-
“property leased to related party is not able to be classified as investment property”I thought building leased to our subsidiaries will be classified as investment property and we will only treat it as PPE when doing consolidation?
Hi,
A subsidiary is a related party so technically what it is saying is correct. I’ll rephrase it so that it says subsidiary as opposed to related party to align with the terminology in the standard.
Thanks
Thanks
“The third floor of an office building leased to Load plc’s subsidiary. The fifteen storey building is owned by Load plc and the third floor had been unoccupied for many years”
Do u mean it is PPE or investment property?
Hi,
In the group accounts it would be PPE as it cannot be IP, we cannot lease a property to ourselves. This is what is happening in the group where P is leasing it to S. In the individual accounts of the subsidiary then it would be treated as IP.
Thanks
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