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Dear Sir, as stated in the following question the transaction is a sale. So we need to calculate rights retained which is pv of lease liab/fv, but in the question we are not given the pv of lease liab, and in the answer ca has been used instead of pv of lease liab, how is this possible?
During 20X5, Blocks Co entered into new lease agreements as follows. This sale and leaseback relates to a cutting machine purchased by Blocks Co on 1 January 20X4 for $300,000. The carrying amount of the machine as at 31 December Agreement 20X4 was $250,000 On 1 January 20X5, it was sold to Cogs Co at fair value of three: $320,000, and Blocks Co will lease the machine back for five years. The sale meets the revenue recognition requirements of IFRS 15 Revenue from Contracts with Customers. Blocks Co has elected not to apply the recognition requirements as permitted by IFRS 16.
Hi,
It looks like an odd question and not something we’d see at this level, maybe at SBR level. I think that given it says we are not applying IFRS16 then it is not being treated as a lease back and so treated as an outright sale. We therefore would not need the information regarding the PV of the future lease payements.
Thanks
Does it have something to do with the election of not applying the requirements by IFRS 16?
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