When a Company Sells an Asset and Simultaneously Leases It

question 167

Essay

When a company sells an asset and simultaneously leases it back, what criteria must be met to apply sale-leaseback accounting rather than accounting for the transaction as a loan?

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Definitions:

Developing Countries

countries with a lower level of material well-being, industrialization, and economic performance than developed countries.

Rate Of Return

A measure of the gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Microfinance

Microfinance encompasses financial services like loans, savings, insurance, and fund transfers targeted at low-income individuals or groups who lack access to traditional banking services.

Lending

The act of giving money to another party with the expectation that it will be repaid with interest.