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Interpretations Committee discusses the application of IFRS 10 to an arrangement in which a single asset is leased to a single lessee

 11 November 2014

The Interpretations Committee received a request for clarification about the interaction of IFRS 10 and IAS 17 Leases. In the submitter’s example, a structured entity (the ‘SE’) is created to lease a single asset to a single lessee. The submitter asks whether the lessee controls the SE and whether the lessee should consolidate the SE. The lease is an operating lease as defined by IAS 17.

The Interpretations Committee noted that, in assessing the effect of a lease on an assessment of power made in accordance with IFRS 10, it is necessary to make a careful assessment of the facts and circumstances. It also noted that it is not the Interpretations Committee’s practice to give case-by-case advice on individual fact patterns. It concluded, however, that the principles established within IFRS 10 would enable a determination to be made when all required information is known.

The Interpretations Committee further concluded that it did not expect significant diversity in the application of IFRS 10 to arise following the implementation of the Standard.

Consequently, the Interpretations Committee thought that neither an Interpretation nor an amendment to a Standard is required and [decided] not to add this issue to its agenda.




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