- This topic has 5 replies, 2 voices, and was last updated 3 years ago by
.
- Posts
When a lessor leases a PPE to a lessee which is under a finance lease, the lessor will need to derecognise the PPE and recognise a finance lease receivables.
My question is,
Do we recognise the difference between the finance lease receivables and carrying amount of PPE in the profit or loss?
Dr Finance lease receivables
Cr PPE
Cr Profit or loss——–?—————————
Or do we recognise it like this below?
Dr Finance lease receivables
Dr COS
Cr PPE
Cr RevenueIf you have a fixed asset and you decide to rent it out under a FL, I would use your first journal.
Is there any situation that would require us to use the second journal? Is it when the lessor is involved in the business of leasing assets?
If you are a manufacturer – making the product – who leases out, you may be in the world of:
Dr Receivable
Cr Revenue
Dr COS
Cr Inventory (But not PPE)
- The topic ‘Finance Lease in the book of lessor (IFRS 16)’ is closed to new replies.