CERTYNEX IFRS ACADEMY

Nerval leases a floor of a building for ten years and sub-leases it to third parties to earn rentals. The right-of-use asset meets the definition of investment property (case assumption). Which initial treatment is consistent?

Recognise the right-of-use asset as investment property, its initial measurement following IFRS 16.

Recognise nothing as an asset: IAS 40 never applies to leased property.

Apply the original wording on finance leases under IAS 17 to measure the right.

Recognise rent paid as an expense and sub-lease income as revenue, with no asset or liability.