Can the assets held under finance lease by a company be revalued just like other freehold assets of the company as per allowed alternative treatment of IAS 16?
Is there any specific restriction of revaluation of leased assets in IAS 17 or any other statutory regulation?
Hi Nauman,
Interesting question, I dont there is any 'speicific' restriction on revaluation of leased assets in law or IAS, but if u look at the sec 235 of ordinance, it says " where the company has revalued ITS assets", which impliedly means the assets owned by the company.
The question is interesting in manner why any company will revalue its leased assets? as leases are available nowadays for 3 to 5 years, and i think every asset has useful life of at least 5 years (except computers)
and the second situation which comes into my mind is the Sale lease back trasaction, i.e. if a company purchases an old asset and then get it leased by sale lease back, then why should a company will lease the assets on its old value, it will revalue the asset first and then get it leased on its revalued amount. In this case the owned asset first revalued and then it was converted into leased asset.
S M R
Raza bahi u have pointed the very right situations which might arise.
Actually i asked this question because in a circular issued by ICAP, ICAP mentioned the major discrepencies in accounts of listed companies and one of the discerepency mentioned is that the leased assets have been revalued.
So thats where i think that there is some restriction on revaluation of leased assets.
U can access the circular at ICAP website
www.icap.org.pk
Tecnical Services / Circulars / Circulars issued in 2003 / Circular No. 08/2003 dated July 25, 2003. The enclosure of this circular contains detail of discrepencies found in accounts of listed companies.
Yes,
I have gone through that circular, It looks that there is some restriction on leased assets, but i think it means, as leased asset were disclosed as revalued assets.
S M R
Now I m more clear after discussion with some of my friends, the company can just revalue its assets, as leased assets are not owned by the company, since cannot be revalued until the company acquire these assets after completion of lease period.
S M R