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November 3, 2020 at 4:18 pm
From the previous example (sale and leaseback Example (at fair value)) you calculated – Right of use asset
$6,486,257 = ($8400000 * 77.22%) and this 77.22% you got when you divided Liability/Proceeds ($10m).
In this example, you rewrote – Right-of-use-asset exactly the same – 6,486,257, but we had different proceeds from Sale (Scenario1 – 9m)
I also calculated by myself and got a different answer
Right-of-use-asset = 7,206,953 85.80%(7,721,735/ 9,000,000) Liability/Proceeds
Please explain why you calculated from $10m? When we have Proceeds of $9m
March 20, 2021 at 8:04 pm
I think it’s the requirement from IFRS that the seller/lessee measures the right of use of asset as a proportion of the CV based on the fair value (10m) and not from cash/proceeds received (9m or 11m)
October 21, 2020 at 9:38 am
Dear Tutor / Other Members, whoever can clarify.
When sold for $11m, higher than Fair Value, we consider it as additional financing. Therefore, Liability increases from 10 million to 11 million, and is recorded at Present Value. So, 11m over 10 years makes it 1.1m per year. For present value, we must now multiply this 1.1m with the Annuity Factor of 7.72 to get 8.49m. Why are we simply adding the additional 1m as it is to the 7.72m recorded while taking into consideration the 10m, whereas the 10m has effectively changed to 11m, and the additional 1m financing must also be discounted to PV??
September 7, 2020 at 12:47 pm
How is gain calculated?
June 25, 2020 at 2:44 pm
Thanks chris for the excellent method of teaching,and for the comforting ,it is a loaded topic
July 12, 2019 at 5:31 am
In the case of sales of $11m:
If we amortize $8.72m over 10 years at $1m payment p.a, at the end of 10 years, there is still lease liability of $1.63m, so is it correct? What should we do?
February 26, 2019 at 12:51 am
Hi Chris, I got question regard of the amount of the right of use asset.
As I read through other resources. We must add the prepayment figure into right of use amount if the proceeds is below than the fair price. Which is 6,486,257 plus additional of 1M. ( a payment made /before the commencement date)
July 22, 2018 at 8:45 am
For the first scenario, proceed less than FV
May I know the impact if I don’t know Dr prepayment but directly DR liability as the second scenario?
Or I can actually do that by Dr the balancing figure in liabilities
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