Hi there
So, company A (parent company) has a building which is leased to company B (subsidiary).
This agreement complies w/ the requirements to recognize an agreement under IFRS 16.
My question is not related to the P&L but to the asset: when I consolidate company A's figures, don't I have a duplicated asset because the asset lies under PPE and ROU? What should I do?
In company A, should I derecognize the PPE, replacing by an AR?
Thanks
IFRS 16 - Intercompany lease
Re: IFRS 16 - Intercompany lease
In the consolidated accounts you only have the building (PPE). All intra-group transactions are eliminated in the consolidation process.
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Re: IFRS 16 - Intercompany lease
I concur with the above i.e. the lease transaction will be eliminated at the consolidated FS being an intercompany transaction. Your question might be more of how to consolidate the lease - please also check how the lease transaction is accounted for at Company A (i.e. you basically have to eliminate all those interco transactions so that you will only have the building after consolidation).
Head of Technical Accounting (a Bank)
London, UK
London, UK
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Re: IFRS 16 - Intercompany lease
Hi,
Just be a tad bit careful with the elimination journal especially if it is an operating lease between the two entities. For reference:
https://assets.kpmg.com/content/dam/kpm ... epager.pdf
Just be a tad bit careful with the elimination journal especially if it is an operating lease between the two entities. For reference:
https://assets.kpmg.com/content/dam/kpm ... epager.pdf
Senior Compliance & Reporting Manager
Ocean & Logistics Reporting & Accounting
Maersk Group
Ocean & Logistics Reporting & Accounting
Maersk Group