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

question 5

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.
• E) None of the given answers.

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Definitions:

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