IFRS 16

[shahabazik]

Hi,

I have a question regarding the conditions to follow in order to consider if a particular lease falls under IFRS 16 or not.

Below is the scenario;

I have a leased a floor with annual rent amounting to $100,000. And the contract with the supplier states that I cannot sublease the floor or part of the floor to any other person/party. In other words, the identified asset can only be used by the head lessee.

Does this represent a lease from the point of view of the lessee? If not, which condition of IFRS 16 was not met and how?

Thanks,

[Marek Muc]

Hi,

see this very useful page of our knowledge base, do your analysis and we'll see where it gets you ok?

https://ifrscommunity.com/knowledge-bas ... g-a-lease/

[shahabazik]

Hi,

Well one of the 3 condition is to have "the right to obtain substantially all of the economic benefits from use of an identified asset".

As per my understanding if the contract includes a condition preventing the customer to sublease a portion of the floor to another person or a party, the above condition will not be met.

[Marek Muc]

subleasing is not using the asset

if the lease contract grants you exclusive right to use the floor, then the condition of having right to obtain economic benefits from use is definitely met