CERTYNEX IFRS ACADEMY

A restaurant group, Tavira, is the lessee of commercial premises for 15 years and subleases part of them to a franchisee. The head lease is not accounted for under the short-term lease exemption. Which of the following statements on Tavira's classification of the sublease are correct?

Tavira assesses the risks and rewards incidental to ownership of the premises themselves, as the owner would.

Tavira assesses whether the sublease transfers to the franchisee substantially all the risks and rewards relating to its right-of-use asset.

The sublease is necessarily an operating lease, since Tavira does not own the premises.

The sublease may be classified as a finance lease if it transfers substantially all the risks and rewards of the right-of-use asset.