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Dear tutor,
Why only operating lease can be an investment property, if it meets the definition of Investment Property? Can finance lease be an investment property ?
Thanks,
I am wondering what is the source of your query? Since IFRS 16 replaced IAS 17, the operating/finance lease distinction applies only to the lessor.
The essence of lease accounting for lessors is now:
SoFP
– Classification as finance or operating lease
– Finance lease: derecognition of the underlying asset, recognition of a lease receivable at amount equal to the net investment in the lease
– Operating lease: continue to recognise the underlying asset
SoPL
– Finance lease: interest measured using the effective interest rate method
– Operating lease: lease payments on straight-line basisSo an investment property will only be recognised as such in the accounts of a lessor if it is an operating lease.
Does that help?
Thank you for your comments.
As per my understanding, only operating lease of the lessors can be an investment property as per IAS 40.
This item of investment property has not been examined yet?
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