SIC 27 – Evaluating the Substance of Transactions in the Legal Form of a Lease

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Date issued: 24 Dec 2001

No amendments made to this IFRIC till date due since issuance.

Why this interpretation was issued?

SIC – 27 determines the substance of the arrangement between the enterprise and the investor. If it meets the criteria of lease then IAS 17, Leases.

If it does not meet the criteria of lease under IAS 17, then SIC – 27, deals with its recognition and accounting methods. It includes mainly:

• Whether a separate investment account of asset and liabilities might exist?
• Treatment for other rising obligation rising from the arrangement
• Treatment for fees income received

Conclusion:

It solely deals with the accounting treatment of arrangements which are not covered under IAS 17.

Effective date:

Periods beginning on or after December 31, 2001 and shall be superseded by IFRS 16, Leases dated 1 January 2019.

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