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CMA Final · Corporate Financial Reporting · Leases (Ind AS 116)

Ind AS 116 differs from IFRS 16 in its treatment of investment property right-of-use assets. Which statement correctly reflects the Ind AS position?

The fair value model paragraph of IFRS 16 has been deleted in Ind AS 116, since Ind AS 40 does not permit the fair value model for investment property. So right-of-use assets that are investment property cannot be measured at fair value under Ind AS.

  1. AA lessee may apply the fair value model to right-of-use assets meeting the definition of investment property
  2. BA lessee must apply the fair value model to all right-of-use assets meeting the definition of investment property
  3. CThe IFRS 16 paragraph 34 on the fair value model has been deleted because Ind AS 40 does not allow the fair value modelCorrect
  4. DThe fair value model is allowed only for right-of-use assets under leases exceeding twelve months

Explanation

The Ind AS 116 comparison with IFRS 16 states that paragraph 34 of IFRS 16 was deleted because Ind AS 40 does not permit the fair value model. Hence no fair value option exists for such right-of-use assets, and the reference to paragraph 34 in paragraph 29 was removed. The other options wrongly assume a fair value option exists.

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