IFRS 16 introduces the concept of a finance sub-lease; where the right of use lease asset gets derecognised, and replaced with a finance sub-lease receivable.
My query is, what does one do where you sub-lease out part of an asset; and retain a portion of the asset for yourself; and the sub-lease is still classified as a finance sub-lease, how would you know how much of the right of use asset to retain and continue amortising.
My guess is you compare the NPV's of the finance sub-lease against the asset value, and the difference continues to be amortised. But it can get tricky when the rents for the head lease and sub-lease differ.
Any thoughts or suggestions.
My query is, what does one do where you sub-lease out part of an asset; and retain a portion of the asset for yourself; and the sub-lease is still classified as a finance sub-lease, how would you know how much of the right of use asset to retain and continue amortising.
My guess is you compare the NPV's of the finance sub-lease against the asset value, and the difference continues to be amortised. But it can get tricky when the rents for the head lease and sub-lease differ.
Any thoughts or suggestions.