Subletting accounting

Subletting accounting

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Dear All,

How would you account for sublettings (Real Estate) under FRS 102 ?

Kind Regards,

 

 

Replies (6)

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paddle steamer
By DJKL
20th Sep 2023 14:39

Section 20 I suspect.

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Replying to DJKL:
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By Felipe Monzon
20th Sep 2023 15:39

Any example?

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Replying to Felipe Monzon:
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By David Ex
20th Sep 2023 15:52

Felipe Monzon wrote:

Any example?

Start at page 178

https://www.frc.org.uk/getattachment/0fba8b6a-ff2b-46e2-8c3f-adfc174d300...(January-2022)(2).pdf

Any issues then probably best to speak to your accountant.

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Replying to Felipe Monzon:
paddle steamer
By DJKL
20th Sep 2023 17:29

You need to understand the lease first to see if what you have is a finance lease or an operating lease, nobody other than you knows all the lease terms.

If the value under the lease is well below the market value of the underlying asset it is likely an op lease, but you need to analyse. If you cannot do this you likely need to pay someone who can.

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Replying to DJKL:
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By Felipe Monzon
20th Sep 2023 17:39

I read that Sub-leases of real estate are now more likely to be classified as finance leases under IFRS but not sure how this would apply under FRS 102

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Replying to Felipe Monzon:
paddle steamer
By DJKL
20th Sep 2023 17:47

Depends on term etc. I suspect say a five year lease might not, a fifty year might.

You need to look at lease the business itself holds and its sublease onward, whilst landlords tend to want sub leases to match the main lease to give consent (well I do) you might have a main lease to you for say 30 years but a sub lease down for only 5 years.

There is no easy answer, you, or someone you pay, needs to read through both leases plus FRS102.

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