Chapter 12 - Sale and Leaseback

Seller becomes ----> Seller-Lessee

Purchases becomes ----> Purchaser-Lessor
-------------------------------------------------------------------------------Leaseback as an OPERATING LEASE
if Sale Price = Fair Value
- any gain or loss shall be recognized immediately
if Sale Price < Fair Value
- any gain or loss shall be recognized immediately
NOTE: if the loss is compensated by future lease rental at
below market value, LOSS IS DEFERRED and AMORTIZED
if Sale Price > Fair Value
- excess of Fair Value over Carrying Amount is RECOGNIZED
IMMEDIATELY
- excess of Sale Price over Fair Value is DEFERRED and
AMORTIZED
-------------------------------------------------------------------------------Leaseback as FINANCE LEASE
- any GAIN on sale or EXCESS OF SALE PRICE OVER CARRYING
AMOUNT is DEFERRED AND AMORTIZED OVER THE LEASE TERM
- any LOSS on sale IS RECOGNIZED IMMEDIATELY