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13.17 Acquiree is a lessor in an operating lease (ASC 842)
Publication date: 28 Feb 2022
us IFRS & US GAAP guide
Differences exist when an acquiree is the lessor in an operating lease under US GAAP and IFRS. Under US GAAP, a separate intangible asset is recorded for the favorable/unfavorable terms relative to market terms. Under IFRS, such favorable/unfavorable terms are included in the estimated fair value of the asset subject to lease, and no separate intangible asset is recorded.
US GAAP | IFRS |
When the acquiree is the lessor in an operating lease, the leased asset should be measured and recognized at fair value unencumbered by the related lease. The acquirer recognizes an intangible asset if the terms of an operating lease are favorable relative to market terms and a liability if the terms are unfavorable relative to market terms.
| When the acquiree is the lessor in an operating lease, the acquirer takes into account any favorable/unfavorable terms of the lease in measuring the acquisition-date fair value of the leased asset. That is, the acquirer does not recognize a separate intangible asset or liability if the terms of an operating lease are favorable/ unfavorable when compared with market terms.
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