Leases in the valuation

Learning objectives

• Take existing leases into account in the valuation without double counting the balances already recognised.L2, L3
• Calculate, from the case data, the amount relating to leases and fair value and justify the basis of calculation.L2, L3

Normative references

• IAS 40 §40When measuring fair value under IFRS 13, the entity ensures that it reflects, among other things, rental income from current leases; double counting is dealt with in para. 50.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• A leased investment property is measured at fair value. How are the current leases taken into account in the measurement?L2
• Yvane holds a leased property, measured at fair value. The appraisal value, which takes the current leases into account, is {appraisal_value}. It includes {accrued_rent_receivable} of accrued rent not yet collected, already recognised separately as a receivable (case data). What amount does Yvane record for the investment property?L3
• A fully leased office building is measured by an appraiser at 12,400,000, taking the current leases into account. The finance director proposes adding to this amount the sum of the rents still to be received under the leases "to reflect the contracts" (case data). In three to five sentences, explain whether this proposal is acceptable.L3