I have the following queries:
a. During termination of sublease, can we rerecognize ROU asset on the Head Lease at the carrying cost of Net Investment on a Finance Sublease
b. Can we always use the Discount Rate on Head lease on Sublease too?
c. During amendment of Sublease for sublease payments, extension of sublease or contraction of sublease etc, I presume we will always calculate gain/loss on sublease and make changes to Net Investment on Finance Sublease. Is this correct understanding?
Queries on Subleasing
Re: Queries on Subleasing
I am also interested in the replies to these queries. In addition, how would you de-recognise a rou asset when you sub-lease it - would you dispose of it, or reverse the cost out etc? Just wondering what the exact postings are on the FAR side
Re: Queries on Subleasing
a. Don't think this is covered, but I'd say yes
b. No, lessors must always use the interest rate implicit in the lease.
c. yes
@ Viv, please start a new topic please
b. No, lessors must always use the interest rate implicit in the lease.
c. yes
@ Viv, please start a new topic please
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Re: Queries on Subleasing
Mark,
I see a problem using implicit rate. ROU value which is going to be derecognized is taken as 'Cost' and cash inflows are equated to this to derive at IRR. If so, in no case we will get Gain/Loss on Sublease activation. But most of the examples assume and calculate Gain/Loss. What do you think about this?
I see a problem using implicit rate. ROU value which is going to be derecognized is taken as 'Cost' and cash inflows are equated to this to derive at IRR. If so, in no case we will get Gain/Loss on Sublease activation. But most of the examples assume and calculate Gain/Loss. What do you think about this?
Re: Queries on Subleasing
Provide more details about the transaction, please