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IAS40/IFRS16

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS40/IFRS16

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by P2-D2.
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  • May 25, 2019 at 11:10 pm #517347
    aliahmed1994
    Member
    • Topics: 38
    • Replies: 51
    • ☆☆

    A parent leases an office building to a subsidiary. In which financial statements will the property appear as investment property?

    answer: The property will appear as an investment property in the parent company accounts. In the consolidated accounts it will be treated as an owner occupied building (as it’s occupied by a group company) and will be accounted for under IAS 16 – Property, Plant and Equipment.

    My question is was it a finance lease or an operating lease?

    May 28, 2019 at 2:10 pm #517659
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    We’d need more information to determine whether it is an operating or finance lease in the lessor’s (parent’s) books. I’d have thought that it would be a finance lease if the subsidiary is recognising the asset.

    Thanks

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