BC130 The IASB noted that, although it is usually appropriate to account for contracts individually, it is also necessary to assess the combined effect of contracts that are interdependent. An entity may enter into a number of contracts in contemplation of one another such that the transactions, in substance, form a single arrangement that achieves an overall commercial objective that cannot be understood without considering the contracts together. For example, assume that a lessee enters into a one-year lease of an asset with particular characteristics. The lessee also enters into a one-year lease for an asset with those same characteristics starting in one year’s time and a similar forward contract starting in two years’ time and in three years’ time. The terms and conditions of all four contracts are negotiated in contemplation of each other such that the overall economic effect cannot be understood without reference to the series of transactions as a whole. In
…Version date: 26 February 2020 - onwards
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