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In BPP textbook, the following was mentioned:
”An asset held by an entity as a right-of-use asset under IFRS16 and leased out under an operating lease is treated as an investment property”
Can anyone please clarify this?This concerns the subsequent measurement of right-of-use asset:
Under IFRS 16, a right-of-use asset is generally measured using the cost model (i.e. depreciated and any impairment losses recognised).
IFRS permits the revaluation model if the right-of-use asset relates to a class of PPE (usually property) to which the entity applies the revaluation model.
If a right-of-use asset meets the definition of an investment property, and the entity has other investment properties, the entity must apply the same model to the right-of-use asset as to other investment properties (cost or fair value model).
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