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Key money to lessor for acquiring rights in the business.

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shakeel

GFM

38 Points Posted on 17 February 2021

A key money has been paid to the lessor to acquire interest in his running business. How it should be treated in accounts as per IFRS 16 or any other standard?

Replies (3)

Quick Summary

This discussion explores the accounting treatment of 'key money' paid to a lessor for acquiring an interest in a running business. It questions whether this payment constitutes rent under IFRS 16 or if it relates to business combinations. The consensus leans towards IFRS 16, IAS 40, and IAS 16 as the applicable standards, particularly if the asset is held as Property, Plant, and Equipment.

yasaswi gomes

My grammar is 💯 good I

7306 Points Posted on 17 February 2021

Key money is rentals? Acquiring interest in lessor business is consolidation standard and to understand the nature of acquisition it is business combinations standard.

shakeel

GFM

38 Points Posted on 17 February 2021

Lessor is already running business on the premises where he is willing to share half portion with lessee on condition of regular sharing of rentals and a non refundable key money payable in the begining.