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- This topic has 4 replies, 3 voices, and was last updated 8 years ago by nari.
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- August 26, 2016 at 7:00 pm #335418
Hello
I am a bit confused regarding the treatment of a gain wrt leases so i am seeking your clarification please.
In the first answer below the gain is recognised in the p & l and is not deferred, however in the second answer, it is deferred.In Q2c – December 2013 part of the answer mentioned the following:
If the sale proceeds match the fair value of the asset, then the whole gain or loss on disposal is recognised immediately. Thus if the asset (FV $5m is sold for $5 million, CV of $4.2 then a gain of $0•8 million will be recognised in profit or loss.
The excess amount of the sale proceeds over the fair value of the asset is deferred and released to profit or loss over the life of the leaseback. Thus if the selling price were $6 million, a gain of $0•8 million would still be recorded but the balance of $1 million would be credited to profit or loss over the lease period of 10 years at $100,000 per annum.However in Q4b i – June 2010, part of the answer mentioned:
On sale of the building (FV $150m, Sales price $150m, CV $120m,), Holcombe will recognise the following in the ?nancial statements to 30 April 2010:
Dr Cash $150m
Cr Of?ce building $120m
Cr Deferred Income (SOFP) $30m
Recognition of gain on the sale of the buildingAugust 26, 2016 at 9:25 pm #335452Never mind , I figured it out.
August 29, 2016 at 10:11 pm #336125Excellent, I’m glad you figured it out.
Thanks
August 30, 2016 at 7:51 am #336175Dear nari,
Could you please share with us the reason behind these treatment?
September 6, 2016 at 11:48 am #338229finance lease-deferred
operating lease-recognize immediately - AuthorPosts
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