Hi Sir, may i ask a question regarding to the measurement of right of use asset retained through the sale and lease back when the proceeds are less than the fair value of the asset.
I understand that the amount below fair value is treated as a prepayment of lease payment. In this case, can I calculate the proportion retained as: ((fair value - proceeds) + PV of lease payments) / fair value? because the amount of (fair value -proceeds) also forms part of lease payment.
If the asset is sold more than its fair value, the excess is treated as additional financing. Can I calculate the retained proportion as: (PV of lease payments - (proceeds - fair value))/fair value? because the amount for additional financing is not part of lease payments?
Thank you ;)
Ask the Tutor ACCA SBR
sale and lease back
8y ago#1Hi,
You can use this if it works but I'd stick to working the debits and credits to get to the answer. The choice lies with yourself on which to use.
Thanks
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