IFRS 16 Lease – Sales & leaseback e.g. no. 7

Dear Sir,

I didn’t understand the entries as well as W1 and W2 calculation.

of this part :ii) Performance obligations are satisfied.

Example 7 – Sale and leaseback (1)

Apple required funds to finance a new ambitious rebranding exercise. It’s only possible way of raising
finance is through the sale and leaseback of its head office building for a period of 10 years. The lease
payments of $1 million are to be made at the end of the lease period
The current fair value of the building is $10 million and the carrying value is $8.4 million. The interest rate
implicit in the lease is 5%.
Advise Apple on how to account for the sale and leaseback in its financial statements if the office
building were to be sold at the fair value of $10 million and:

ii) Performance obligations are satisfied.