Head lease
The primary lease held by a lessee before it grants a sublease to another party.
Definition
The head lease is the original lease arrangement between the property owner (or original lessor) and the lessee. Where the lessee goes on to sublet some or all of the asset, the original lease becomes the head lease and the lessee becomes an intermediate lessor. The accounting for the head lease continues under normal lessee accounting. The sublease is accounted for separately under lessor accounting rules.
Why it matters
Head lease and sublease balances need to be considered together when an entity both leases and sublets an asset. Netting these balances would be incorrect; they must be presented separately in the financial statements.
In AuditLease
Head lease accounting is fully supported within AuditLease. Sublease lessor accounting will be addressed in a future platform phase covering property portfolio functionality.
Related terms
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence, so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.