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Editorial Board on Accounts and Audit
  • Ind AS-40

    by Chirag on Friday, January 03, 2020 at 11:59 PM

    Dear Sir, X Ltd lets out a property to Y Ltd under Finance lease . Both the companies are subsidiary of P Ltd. Y Ltd sublets a portion of the property to K Ltd under FINANCE LEASE. Query- How we will treat the property in SEPARATE FINANCIAL STATEMENT AS WELL AS CONSOLIDATED F.S AS PER IND AS -40 ?? Pls clarify..

    Replied byEditorial Board Saturday, January 18, 2020 at 12:17 PM

    Dear Chirag,

    Para 9(e) of Ind AS 40 provides for exception that Ind AS 40 is not applicable on property that is leased to another entity under a finance lease. Therefore, these transaction shall be governed by Ind AS 116.

    A. Separate financial statement
    Transactions shall be governed by Ind AS 116 as per the provisions of finance lease.

    B. Consolidated financial statements
    Normal provisions of elimination of inter-company transactions and balance shall be done in consolidated financial statement as per Ind AS 110.

    Para B86 of Ind AS 110 requires to eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full).

 
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