sale and lease back -above fair value sum

Aaddanki5y ago

hi, Bungle Co sells a building to the Zippy Co for $800,000 cash. The carrying amount of the building prior to the sale was $600,000. Bungle Co arranges to lease the building back for five years at $120,000 per annum, payable in arrears. The remaining useful life is 15 years. At the date of sale the fair value of the building was $750,000 and the interest rate implicit in the lease is 4%. The cumulative present value of $1 in five years' time is $4.452. The transaction satisfies the performance obligations in IFRS 15, so will be accounted for as a sale and leaseback. i am unable to solve this question can you help me in solving it. Thank you.

P2-D2Tutor5y ago#1

Hi, I'll help you solve it if you show me how you've solved it first. I'm not here to just solve the questions for you, you must attempt them first. Once you've done so then I'd be more than happy to help you out. Thanks.

Aaddanki5y ago#2

firstly i have done as it a on a market terms ie fair value then as it is above i added excess 50000 to lease liability and bank dr bank 750000 dr rou 427392 cr lease 534240 cr asset 600000 cr gain 43152 dr bank 800000 dr rou 427392 cr asset 600000 cr lease liability 584240 cr gain 43152 than you.

P2-D2Tutor4y ago#3

Hi, Where have you got all of the figures from, please? I'd need to see the workings and some narrative explanation to fully understand what you are doing. Thanks

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