Hi,
In an operating lease arrangement, the lessor recognises income on a straight line basis over the lease term and it is mentioned that the underlying asset should depreciated based on IAS 16 PPE or IAS 38.
Is IAS 40 Investment property not applicable in this because the lessor holds the asset for earning rentals?
Ask the Tutor ACCA SBR
Operating lease
5y ago#1OL LESSOR
If it's PPE - continue to recognise at PPE and depreciate and recognise rental income
If it's IP - continue to recognise as IP (normally at FV with no depreciation) and recognise rental income
FL LESSOR
Recognise as Lease Receivable with finance income
(Don't quote standard numbers in the exam (or here!) - it leads to confusion)
Thank you so much.. BTW what if we quote a wrong standard number? Losing all marks?
5y ago#3You won't lose marks - but, as I said, easiest not to quote numbers. Just explain the rules!
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