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Dear tutor
$18.92m is the carrying amount at Nov 20×6 when sell the asset. per your note, seller/lessee should “recognised ROU asset as a proportion of the previous carrying value of underlying asset”, so the proportion is PV of lease/FV of asset, the lease liability is $26m,
is that correct?
Many thanks
Derecognise PPE at CA – most candidates would have put 18 or 20, as no-one would had time to mess around with the depreciation.
Recognise R of U asset at, as you say, PVMLP/FV x CA
Recognise cash receipt
Recognise liability at PVMLP – 26
Balance to P&L
(in future please use more helpful thread title – e.g. sale and leaseback – and give a bit more detail, so that other students using this don’t have to scrabble around for the question)
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