An owner of an asset may sell it and then lease it back from the new owner.Where this lease meets the conditions to be classified as a finance lease,the profit or loss on the sale of the asset recorded by the lessee should be classified as a finance item in the income statement in the year of the sale.

Question

Quizplus · Accepted Answer

In a sale and leaseback transaction classified as a finance lease, the profit or loss on the sale is deferred and amortized over the lease term, not recognized immediately in the income statement.

An Owner of an Asset May Sell It and Then