BLM23060 - Defining long funding leases: commencement and transition: pre-existing heads of agreement: relating to two or more assets (FA06/Sch8/Para25)
This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.
This page will be archived on 30 November 2025
FA06/SCH8/PARA20 caters for pre-existing heads of agreement that relate to two or more assets.
Where the assets are to be used individually the principles in CAA01/S70M (BLM20300 onwards) are used to deem separate pre-existing heads of agreement. Each deemed pre-existing heads of agreement should be considered separately for the purpose of considering whether the transitional conditions are met.
Where the assets are to be used as part of a greater whole, that is they are constituents of a ‘combined asset�, the combined asset is to be treated as if it were a single asset for the purpose of determining whether the transitional provisions apply.
A combined asset is an asset that meets all the following conditions
- the asset is for use individually,
- it consists of two or more items of plant or machinery (referred to as constituent assets),
- each of the constituent assets is constructed to be used with the other constituent assets as part of the combined asset.
An asset that can be used individually is not a constituent asset just because it is one of a number of similar assets, the use of which is to be co-ordinated to any extent.
See examples at BLM23065.