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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 16 Finance Leases
What happens to recognising an asset for lessor in a finance lease if ownership doesn’t transfer at the end of the lease ie meets many criteria of a finance lease (compensation for cancellation, major part of economic life, secondary period of below market rent), but actual ownership does not transfer. Normally you would derecognise the asset. Or should you account as an operating lease?
The lease should be structured so that at the end of the lease term the carrying value of the asset is nil, and so when the asset is returned to us it has no value.
Thanks