alleryStart learning →A sale and leaseback transfer fails the sale test. The seller-lessee:
Akeeps asset, books financial liability
Breduces its lease liability now
Cbooks the full gain at once
Dderecognises the asset fully
Answer & Solution
Correct answer: A. keeps asset, books financial liability
With no sale, the asset stays on the books and the proceeds are recorded as a financial liability.
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Related questions
Ind AS 116 applies to annual reporting periods beginning on or after:At transition, a practical expedient lets an entity avoid reassessing:Modified retrospective adoption: the cumulative effect goes to:Asset worth Rs 5,00,000 sold for Rs 4,60,000 in leaseback at market rent. Rs 40,000 shortfSame sale-leaseback: total gain is Rs 2,00,000 and the retained right is 25% of fair valueSale-leaseback: carrying Rs 4,00,000; fair value Rs 6,00,000; PV of market lease payments In a sale and leaseback, whether the transfer is a sale is decided using:A lessor's maturity analysis of lease payments receivable covers at least each of the firs