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 statement of comprehensive income in the year of the sale.

Question

Quizplus · Accepted Answer

The profit or loss on the sale of the asset in a sale and leaseback transaction that results in a finance lease is deferred and amortized over the lease term, rather than being recognized immediately in the statement of comprehensive income.

An Owner of an Asset May Sell It and Then