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In this questions, the clause in the lease is more of a finance lease rather than operating lease, so don’t we have to specify that in the answer?
No. Why do you believe that it is more of a finance lease? We are only leasing the building for 6 years, which isn’t substantially all of the assets useful life.
You’re specifically told that it is an operating lease, so I wouldn’t deal with anything in IAS 17. The focus here is on the addition to the property (IAS 16) and then whether to provide for the refurbishment at the end of the lease (IAS 37).
Thanks
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