Peppercorn Leases and Other Leases With Significantly Below-market Terms and Conditions

With not for profits struggling to come to grips with the concept of valuing peppercorn leases and other leases with significantly below-market terms and conditions, HLB Mann Judd explains what the issues are and what the Australian Accounting Standards Board has recently decided on this matter.

We have previously reported on the significant impact that new accounting standards will have on NFP entities, particularly in the areas of revenue recognition and lease accounting. There is a common misconception among some NFPs that produce special purpose financial reports, that the new standards will not apply to them as they do not consider themselves to be reporting entities. As such, they believe that they can “pick and choose” which accounting standards they should apply.

Our view on this is taken from the Australian Securities and Investments Commission’s view in relation to entities that are governed by the Corporations Act (including NFPs that are companies limited by guarantee) – and that is that all such entities are required to comply with the measurement and recognition provisions of all relevant accounting standards, but not necessarily all of the disclosure provisions.

To view the ProBono article in full, click here.

Let us keep you up-to-date

Subscribe to the NFPAS email newsletter to receive not for profit industry news and special updates.