IFRS 16 - IBR

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Ketan Marwah
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IFRS 16 - IBR

Post by Ketan Marwah »

Hello, Upon merger of two subsidiaries (lessee's) leading to a novation of the lease agreement (novated from merged entity to surviving entity), should the IBR be revised for consolidated reporting OR as the merger is a common control transaction therefore balances could be transferred without remeasuring lease liabilities basis the IBR of the surviving entity? Thanks for your help in advance.
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Marek Muc
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Re: IFRS 16 - IBR

Post by Marek Muc »

what method did the surviving entity use to account for the merger?
Ketan Marwah
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Re: IFRS 16 - IBR

Post by Ketan Marwah »

The surviving entity has followed the common control combination meaning a carryover of all exact same values from the merged entity. Since IFRS 16 stresses upon the usage of incremental borrowing rate that is lessee specific therefore I am unsure if lease liabilities should be remeasured basis the IBR of the surviving entity for the consolidated reporting. Thanks.
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Maersk Group
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Marek Muc
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Re: IFRS 16 - IBR

Post by Marek Muc »

I would not remeasure the lease liability consistently with the approach taken for other assets and liabilities.
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