need to know / leases - project update - BDO International

24 LEASES - A PROJECT UPDATE
CONSEQUENTIAL AMENDMENTS –
BUSINESS COMBINATIONS
If the acquiree is a lessee, the acquirer would recognise and measure a liability to make lease payments at the present value
of future lease payments as if the lease contract is a new lease at the acquisition date and a right-of-use asset equal to the
liability to make lease payments, adjusted for any off-market terms in the lease contract.
If the acquiree is a lessor and the receivable and residual approach is used for an asset, the acquirer would recognise and measure
a receivable at the present value of future lease payments at the acquisition date and a residual asset as the difference between
that present value and the fair value of the underlying asset at the acquisition date.
If the acquiree is a lessor of investment property- the acquirer should apply the guidance in IFRS 3 Business Combinations that
relates to acquired operating leases.
If the acquiree has short-term leases then the acquirer would not recognise separate assets or liabilities related to the lease
contract at the acquisition date.
BDO comment
It appears that, in contrast to an entity that enters into short term leases, that the acquirer would not have the option of
recognising assets and liabilities arising from short term leases.