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Sale and leaseback

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Sale and leaseback

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
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  • June 1, 2021 at 8:57 pm #622703
    Nandhakrishnan
    Participant
    • Topics: 11
    • Replies: 11
    • ☆

    Raffen entered into an agreement on 1 January 20X7 to sell its head office building for its fair value of $5,800,000 and lease it back for six years under a lease. The carrying amount of the building on 1 January 20X7 was $5,500,000. The present value of the annual payments is $4,957,326 and the transaction constitutes a sale in accordance with IFRS 15. How much should Raffen recognise in profit or loss in the year ended 31 December 20X7 in respect of this transaction?

    In this question have they referred to profit or loss on account of rights retained or right transfered ??

    June 3, 2021 at 9:40 pm #623006
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7177
    • ☆☆☆☆☆

    We look at the amounts retained as that then relates to the value of the asset that we still recognise within our accounts following the transaction.

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