I have a client who paid £58000 cash upfront for a 10 year lease on property. After the 10 years they will release the property to the landlord.No additional monthly amounts are being paid.
Given the changes on accounting treatment for leases, how should I account for the above.
can anyone please help
thanks
Rudo
Replies (3)
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This is a short leasehold property, so should be accounted for under IAS16. It's not a lease within the scope of IFRS16
The short term lease exemption under IFRS 16 is for leases of 12 months or less. This is a 10 year lease according to the OP, albeit seemingly paid up front, so have I missed something?
Lease accounting from SSAP21 onwards is based on the substance of the transaction, being purchase of an asset financed by a loan.
Here, we've bought an asset and paid for it in full on day 1 with no financing element and no further payments.