Recognition of Leased Project Assets in Accordance with Ind AS 116

Under Ind AS 116, an arrangement contains a lease if there is an identified asset. An asset may be explicitly specified in a contract or it can also be identified by being implicitly specified at the time that the asset is made available for use by the customer. It further states that when assessing at the inception date, whether there is an identified asset, an entity does not need to be able to identify the particular asset (for example, a specific serial number) that will be used to fulfil the contract to conclude that there is an identified asset. Instead, the entity simply needs to know whether an identified asset is needed to fulfil the contract from commencement. If that is the case, then an asset is implicitly specified.

Whether the ‘Infrastructure Assets’ leased out to Ministry of Railways (MoR) be considered as lease under Ind AS 116 even in case the lessee has rights to a non–physically distinct portion of an underlying asset?

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