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Hi Mike,
I have a query on sale and leaseback. In case the excess of proceeds over CV, it has a deferred profit and amortised over term. I wonder why it created a deferred profit and must to amortised? We couldn’t recognised once in I/S in period that It sales?
Pls explain it for me,
Thank you very much.The entry of this case is : DR Cash(proceeds) / CR asset (CV) and CR deferred income. What is entry to amotised deferred income each year?
For example, if we sale asset with 200$ and it has CV 150$ and lease back with 5 yrs.
The entry is : Dr cash 200/ Cr asset 150 and Cr deferred income 50
Each year we allocated deferred income by : Dr Deferred income 10/ CR RE 10. Am I right?No – sadly!
The double entry is
Dr Cash with the sale proceeds $200
Cr Obligations under finance lease $200OK?
I don’t understand this entry. How about the sale of asset and deferred profit?
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