IFRS 16 Leases - Temporary Accomodation

Hi,

Under the new leases standard IFRS 16, does anyone know if temporary accommodation (Council been the lessee, where it leases from other landlords to place tenants in properties) does it qualify for finance lease instead of operating lease?

If answer to above is yes, than it would be helpful to know how other local authorities are accounting for temporary accommodation as this will be in the arrange of few hundred leases?

Thank you

Rubia

Parents
  • I have similar issue, we have rental agreements for temporary accommodation (for whole building) and renewed every three to five years term.  Currently they are treated as operating leases, remaining economic useful life of the asset is not major part of the contract and contract value is not significant to the value of underlying asset. 

    However, going forward , I wonder if this could be argued. I have recently been to FAN network and raised this question, and told this is one of the issues Technical team is aware of and currently working on. 

Reply
  • I have similar issue, we have rental agreements for temporary accommodation (for whole building) and renewed every three to five years term.  Currently they are treated as operating leases, remaining economic useful life of the asset is not major part of the contract and contract value is not significant to the value of underlying asset. 

    However, going forward , I wonder if this could be argued. I have recently been to FAN network and raised this question, and told this is one of the issues Technical team is aware of and currently working on. 

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