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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.
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.
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 600000cr gain 43152
dr bank 800000
dr rou 427392
cr asset 600000
cr lease liability 584240
cr gain 43152
than you.
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