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Analyze, comprehend, and evaluate the following statements and write TRUE if the statement is correct and...

Analyze, comprehend, and evaluate the following statements and write TRUE if the statement is correct and FALSE if it is wrong.

A parent leases an office building to a subsidiary. The property will appear as investment property in consolidated financial statements (T/F)

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Answer #1

The Statement is FALSE.

As per IAS 40 'Investment Property' , Investment property is property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both.

However, IAS 40 also states that intra company lease will not constitute as investment property in consolidated financial statements. However, it can be considered as Investment Property in the Separate financial statements of the lessor (in this case, the parent company), if the property (office building) qualifies as such.

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