Where a Sale and Leaseback Results in the Creation of an Operating

question 35

Multiple Choice

Where a sale and leaseback results in the creation of an operating lease and the sales price varies from the fair value of the asset,the lessee:

• A) either immediately recognises a profit or loss, or defers and amortises the profit or loss, depending upon the carrying amount of the asset (when sold) and whether any loss is compensated for by future lease payments.
• B) immediately recognises a profit or loss.
• C) defers and amortises the profit or loss.
• D) either immediately recognises a profit or loss, or defers and amortises the profit or loss, depending upon the length of the lease term.

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Definitions:

Wants

Desires or wishes that are not essential for basic survival but are sought for pleasure, comfort, or luxury.

Ability

The possession of the means or skill to do something.

Customer Satisfaction

A measure of how products or services supplied by a company meet or exceed customer expectation.

Perceived Risk

The potential for loss or harm that consumers feel may exist when deciding to purchase a product or service.