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