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Hello Sir,
An asset from which a company received rental or periodic revenue for its usage, which is not the core source of income.
Can the above be classified as an operating lease and/or investment property?
What is the difference between operating leases under IAS 17 and investment properties under IAS 40?
You are able to lease an asset as a lessee and use that asset to generate a stream of income from rentals. In that situation you would be holding the asset on lease but also classing it as an investment property.
Which type of lease would depend upon the lease terms but it’s probably not for the majority of the asset’s life so probably an operating lease
From IASplus website:-
“Property held under an operating lease. A property interest that is held by a lessee under an operating lease may be classified and accounted for as investment property provided that:
the rest of the definition of investment property is met
the operating lease is accounted for as if it were a finance lease in accordance with IAS 17 Leases
the lessee uses the fair value model set out in this Standard for the asset recognised
So, in summary, a property acquired under a lease (may be operatin or finance) can be classified as an investment property
OK?
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