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leaseback's proceed excesses the fair value, big confusion

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › leaseback's proceed excesses the fair value, big confusion

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 21, 2017 at 2:01 am #373427
    mansoor199111
    Member
    • Topics: 1
    • Replies: 18
    • ☆

    Hi Mr.Christopher,

    I came across two different approaches regarding the dealing with the excess amount of the proceeds over the fair value of the leased asset on a finance leaseback.

    one approach dealt with it through, I guess, OCE and amortised it over the lease term,
    the other one which you thankfully explained is to consider it as a loan and split the rent into a rent expense and a reduction of the loan.

    the first one is shown on the website on the standards, the second is yours. and you are for me as credible as the standards themselves.

    I thought it is something to do with perhaps the international version and the UK one, I am doing the international one.

    appreciate it
    Mansoor

    February 22, 2017 at 1:00 pm #373661
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi Mansoor,

    You can adopt either method as both give very similar results, so I’d just stick to the method that you are more comfortable with.

    Thanks

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