any knowledge/experience of IAS 17?

any knowledge/experience of IAS 17?

Didn't find your answer?

Below is an extract from IFRIC update which states that for both a leasor and leasee, where the agreement has an annual fixed inflator (i.e. say 5% or inflation), it is necessary to account for it straight line over the term of the lease. This means for businesses with investment properties, for each individual lease it is necessary to review the agreements in detail and account for the revenue differently than under GAAP. Under IFRS (IAS 17) it is necessary to account for the "inflation rises" which will occur during the lease term on a straight line basis, with no discounting for time value of money. This feels like you are recognising revenue before you actually earn it. Does anyone have any comments on this as it would be much appreciated!

QUOTE "The IFRIC noted that the accounting under IAS 17 for operating leases does not incorporate adjustments to reflect the time value of money, for example by deferring a portion of a level payment to a later period. Rather, IAS 17 requires a straight-line pattern of recognition of income or expense from an operating lease unless another systematic basis is more representative of the time pattern of the user's benefit. The IFRIC noted that recognising income or expense from annual fixed inflators as they arise would not be consistent with the time pattern of the user's benefit".
Andy McD

Replies (1)

Please login or register to join the discussion.

avatar
By listerramjet
28th Nov 2005 09:01

fair value (inflation) accounting! BUT
to put it politely it sounds like garbage. How about other peoples examples of garbage in IAS and FRS - someone should publish a garbage factor for each standard. I think this would make for interesting reading.

Thanks (0)