Whether asset under finance lease can be revalued under IAS 16 like other PPE??
1 Replies
CA. Mayur
(Service)
(147 Points)
Replied 20 August 2012
Reference to paragraph 4 and 27 of IAS 16 shows that it includes finance leased assets
as part of its scope and specifically refers to other accounting for a finance lease asset,
after initial recognition. So treatment of finance leased assets should be same
as owned assets under IAS 16, including revaluation, is consistent with the economic
substance of finance leases in that “substantially all the risks and rewards incidental to
ownership of an asset” are transferred to the lessee.
Accordingly, assets that are recognized under a finance lease by a lessee may be
revalued using the revaluation option under IAS 16.
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