Sale and Leaseback Question

Hi Chris,

Thanks for the lectures. Love your sense of humour.

For sale and leaseback transactions where the sale proceeds are not equal to fair value, what is the subsequent treatment of the prepayment / additional financing?

In the example lecture, you said that the prepayment is credited annually over the lease period and the lease liability is debited. How would this affect the amortization of the lease liability? (I also read elsewhere that the prepayment is amortized and expensed directly as a finance expense, so that also confused me a bit. Not sure if I am getting ahead of the FR paper though).

And in a case where there is additional financing, i.e. sale is higher than fair value, is the additional financing amortized together with the PV of the lease payments?

Thanks.