A company sells a building to a bank in 2011 at a gain of $100,000 and immediately leases the building back for period of five years. The lease is accounted for as an operating lease. The building was originally purchased for $200,000 and currently had a book value of $50,000 at the date of the sale.
-What amount should be recognized as a gain in 2011 using IFRS?

Question

Quizplus · Accepted Answer

Under IFRS, the entire gain of $100,000 should be recognized in 2011 when the sale took place. This is because there are no specific rules for sale-and-leaseback transactions under IFRS, and therefore, the general principles of recognizing revenue and expenses apply.

A Company Sells a Building to a Bank in 2011