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Good Afternoon,
Entity A uses full IFRS and IFRS 16 is applicable for the very first time.
Entity B uses IFRS for SME and IAS 17 is applicable.Entity A is the parent and is a lessee since it rents space from Entity B. Entity A treated this lease as an operating lease under the old standard i.e. IAS 17 in it’s separate financial statements.
Entity B is the subsidiary and owns space which it rents to Entity A and other external tenants. Entity B treats this as an operating lease in it’s separate financial statements.
In preparing the consolidated financial statements of the A group, how would this arrangement be treated?
Thank you.
In the exam the group accounts should be prepared using the accounting policies of the parent
I assume that you are asking this question in the context of the exam
Any answers given in this forum are for exam purposes only and must not be used in a real life situation without taking proper advice
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