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Sir can please explain the example question calculation of F7 BPP book of ,
Capital co entered into a sale and leaseback on 1 April 2017. it sold a lathe with a carrying amount of $300,000 for $400,000 (equivalent to fair value ) and lease it back for a five-year period, equivalent to its remaining useful life. The transaction constitute a sale in accordance with IFRS 16.
The lease provided for for five annual payment in arrears of $90,000. The rate of interest implicit in the lease is 5%.
Ruquired
What are the amount to be recognized in the financial statements at 31 March 2008 in respect of the transaction ?My calculations suggest:
Present value of $389,652
Depreciation $80,000
Finance lease interest $19,482How am I doing?
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