SALE AND LEASEBACK - IFRS 16 (SALE AT FAIR VALUE)

In this tutorial video, I demonstrate a sale and leaseback transaction is accounted for in the books of the seller-lessee in a situation where the sale meets the IFRS 15 Revenue from Contracts with Customers recognition criteria and the sale is at fair value.

[@richardarhinful7346]

You are better than all the professors who taught me this course.

[@georgesaccountingtutorials]

Hahaha...I'm glad to be of help

[@PrinceSegoe-yd3je]

God bless u senior 🙏🙏

[@georgesaccountingtutorials]

Amen! Thanks for patronizing my channel, Prince.

[@gamilaadam5133]

I am realy benifited from your lectures

[@georgesaccountingtutorials]

Good to hear

[@SKM.Online]

Excellent

[@velepijere516]

Thank You this makes sense and well explained🙏❤

[@geofreyj.1986]

You helped me man thanks much am from Tanzania big up Asante sana baba

[@olugbengadaniel5402]

Hi George. Under the Amortisation Schedule, should the finance cost (for a particular year) be charged on the opening balance (before the deduction of the lease repayment) OR on the outstanding balance (after the lease repayment)? You seem to have done this differently while solving 'BQ Ltd' question and 'CALC Ltd' question (under Sales and Lease back). Please, explain. Thanks

[@georgesaccountingtutorials]

Thank you for your question, Daniel. It depends on when the annual lease payments are made - whether in arrears or in advance: 1. Where annual lease payments are made in arrears (i.e. at the end of the period), the finance cost is computed on the opening balance. 2. Where annual lease payments are made in advance (i.e. at the beginning of the period), the finance cost is computed on the outstanding balance (i.e. after subtracting the lease payment).

[@charlesamofa5826]

precise and understanding... thank you bro

[@rumeeeey]

I am very thankful for your video….. great help

[@Merciless_cg]

splendid presentation

[@alexndogwedu7248]

Excellent delivery

[@mehedikhan3959]

Very clear and to the point

[@user-kx7ch2ye9z]

I have question in lease back no sale how amortized financial liability

[@PraiseHYMN725]

Teacher, suppose the sale did not meet the IFRS15 criteria. Do we proceed with lease calculations and ignore sale transaction?

[@georgesaccountingtutorials]

No. When the IFRS 15 criteria are not met, apply the following: * The seller-lessee should continue to recognize the asset and a financial liability (= sale proceeds). *The buyer-lessor should only recognize a financial asset (= sale proceeds).

[@kinexjohnmary9909]

Superb 👍💪

[@user-vc2cu5vq4b]

Good evening

[@hillsongcovers2173]

Hi George, dont you think that gain on transfer of rights posted to PorL should be in bracket since it is an income?

[@georgesaccountingtutorials]

Hello, No, incomes have credit balances and so I cannot put the gain on transfer in brackets. It is expenses that are normally put in brackets to indicate they are negatives or have debit balances. In this case, I chose to put (Dr) against depreciation and finance costs to show that they are expenses.

[@hillsongcovers2173]

@@georgesaccountingtutorials Ok...But then it seems you forgot to put (Cr) against the gain on transfer of rights

[@georgesaccountingtutorials]

@@hillsongcovers2173 That's true.

[@ronimaxwell3313]

thanks bro I learn a lot from you. This is so advance to me. but I have one question.. the question relates to my basic knowledge on ledgers. let's say working with one ledger account. i have to identify similar nature account and summing them together and later extract an amount known as balance brought down.. when looking to how u work out lease and come with the Gain on the Transfer of Rights (368,200.00) and saying it has the credit nature .. a question arise with me... The question is yr Journal entry is more likely a ledger entry? or just combine two at once? Can u confirm me that yr data movement for lease is just similar to trading account ledgers? I thought 368,200.00 can be on debit side..am not arguing u sir.. I come up with this question cos am so familiar with ledger extraction on normal accounting. and thought must similar to very advance practices. please I need further clarification.. probably am confused..LOL

[@georgesaccountingtutorials]

Hello bro, sorry for the late response. I had challenges with my machine. I understand where you are coming from. I used the "general journal" approach, which is different from the T account. For the general journal, all losses, expenses, and assets are recorded on the debit side while gains, incomes, liabilities, and equity items are recorded on the credit side. It is worthy of note that the general journal is self-balancing. That is, after making the correct entries, the total of the debit side should equal that of the credit side. I hope this helps. If not, you can contact me via "[e-mail]" so we can have a Google Meet on it, if that works for you.

[@roneymeza997]

Hi George. A question, do you have any example where a loss is recognized by the leaseback? or any document that I can review?

[@georgesaccountingtutorials]

Hello, Roney. I do not have an example of that yet. In the meantime, you can contact me via "[e-mail]" so we have a Google Meet on that, if that works for you.

[@ahwindzipaedziemensah9954]

What if the fair value of the asset equals the carrying amount?

[@ronimaxwell3313]

IFRS use fairvalue in variety of description. I thought estimating a new price for acquisition of asset is refer to fair value. estimating selling price for asset can be same as carrying amount...LOL..what's your thought on this?

[@user-kx7ch2ye9z]

If leaseback not sale type Here as lessee maintain the asset and received from lessor 1000000 doller here Dr cash Cr finance liability Here finance liability how I can amortized it

[@georgesaccountingtutorials]

When the IFRS 15 criteria are not met, apply the following: * The seller-lessee should continue to recognize the asset and a financial liability (= sale proceeds). *The buyer-lessor should only recognize a financial asset (= sale proceeds).