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ACCA Applied Skills · Financial Reporting · Leasing

Which of the following arrangements is within the scope of IFRS 16 and so must be assessed for a right-of-use asset by the lessee?

The sublease of an office floor is within IFRS 16. Leases of minerals and oil exploration rights, biological assets under IAS 41, and licensing rights such as film rights are scoped out. A property sublease is an ordinary lease of a tangible asset, so it is covered.

  1. AA licence of intellectual property such as film rights held by a licensee
  2. BA lease of mineral exploration rights to extract oil from land
  3. CA lease of a biological asset such as a vineyard's vines
  4. DA sublease of an office floor that the entity leases from a landlordCorrect

Explanation

IFRS 16 scope excludes leases to explore for or use minerals and oil, leases of biological assets within IAS 41, service concession arrangements, licences of IP granted by a licensor under IFRS 15, and rights held under licensing agreements within IAS 38 (such as films). A sublease of property is a lease and is in scope.

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