June 2013 Q3b - Sale and Lease back query

Following is the question:- (b) Sale and leaseback arrangement A sale and leaseback arrangement involving a large property complex was entered into on 31 January 2013. The property complex is a large warehousing facility, which was sold for $37 million, its fair value at the date of the disposal. The facility had a carrying value at that date of $27 million. The only accounting entry recognised in respect of the proceeds raised was to record the cash received and recognise a non-current liability classified as ‘Obligations under finance lease’. The lease term is for 20 years, the same as the remaining useful life of the property complex, and Setter Stores Co retains the risks and rewards associated with the asset. (7 marks) Required: Comment on the matters to be considered, and explain the audit evidence you should expect to find during your file review in respect of each of the issues described above. My Query - The question mentions that,"The lease term is for 20 years, the same as the remaining useful life of the property complex, and Setter Stores Co retains the risks and rewards associated with the asset." This concludes that seller co. still has the right to receive risk and rewards from the assets for its remaining useful life. Hence, as per IFRS 15, this transfer cannot be recorded as sale (as seller has the right to receive risk and rewards from the assets for its remaining useful life.) In this case, it is not a sale and lease back transaction and :- 1) Seller should still show the asset in his BOAs 2) Amount received from buyer should be treated as a "loan" and not as a lease transaction Hence the Journal entry will be:- Cash Dr. 37m financial Liability Cr. 37m Asset should be recognized at 27m (unless the co. is planning to revalue the entire class of that asset. Single asset cannot be revalued.) But the Examiner answer mentions the following treatment which I feel is incorrect :- The following entry should have been made on the disposal and leaseback of the property complex: DR Cash $37 million CR Property, plant and equipment $27 million CR Deferred income $10 million And the asset and finance lease liability should be recognized at fair value: DR Property, plant and equipment $37 million CR Obligations under finance lease $37 million Please help with the correct treatment.