Skip to content

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

Which statement about the fair value model and right-of-use assets is correct under Ind AS 116 as notified in India?

Ind AS 116 deletes the IFRS 16 provision permitting fair value for investment-property right-of-use assets. The reason is that Ind AS 40 does not allow the fair value model, so no such option exists in Indian standards. Paragraph numbers are retained for consistency with IFRS 16.

  1. AA lessee may measure a right-of-use asset meeting the investment property definition at fair value, as under IFRS 16
  2. BThe fair value model reference in the subsequent measurement paragraph is deleted because Ind AS 40 does not allow the fair value modelCorrect
  3. CA lessee must measure all right-of-use assets at fair value after initial recognition
  4. DRight-of-use assets that are investment property are exempt from Ind AS 116 recognition

Explanation

IFRS 16 paragraph 34 allows fair value for right-of-use assets that are investment property if the lessee uses the IAS 40 fair value model. Ind AS 40 permits only the cost model, so Ind AS 116 deletes that paragraph and its reference in paragraph 29. The first option describes the IFRS position, which is wrong for India.

Did you get it right without looking?

One question tells you little. A timed set on Leases (Ind AS 116) shows your real accuracy, how long you take and where you lose marks.

Practise Leases (Ind AS 116)Free diagnostic mock

More Leases (Ind AS 116) questions