(AS) 19

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380 <strong>AS</strong> <strong>19</strong> (issued 2001) Appendix Sale and Leaseback Transactions that Result in Operating Leases The appendix is illustrative only and does not form part of the accounting standard. The purpose of this appendix is to illustrate the application of the accounting standard. A sale and leaseback transaction that results in an operating lease may give rise to profit or a loss, the determination and treatment of which depends on the leased asset’s carrying amount, fair value and selling price. The following table shows the requirements of the accounting standard in various circumstances. Sale price established at fair value (paragraph 50) Carrying amount equal to fair value Carrying amount less than fair value Profit No profit Recognise profit immediately Carrying amount above fair value Not applicable Loss No loss Not applicable Recognise loss immediately Sale price below fair value (paragraph 50) Profit No profit Recognise profit immediately Loss not compensated by future lease payments at below market price Loss compensated by future lease payments at below market price Recognise loss immediately Defer and amortise loss Recognise loss immediately Defer and amortise loss No profit (note 1) (note 1) (note 1)
Sale price above fair value (paragraph 50) Profit Defer and amortise profit Defer and amortise profit Leases 381 Defer and amortise profit (note 2) Loss No loss No loss (note 1) Note 1. These parts of the table represent circumstances that would have been dealt with under paragraph 52 of the Standard. Paragraph 52 requires the carrying amount of an asset to be written down to fair value where it is subject to a sale and leaseback. Note 2. The profit would be the difference between fair value and sale price as the carrying amount would have been written down to fair value in accordance with paragraph 52.
Page 1 and 2: Accounting Standard (AS) 19 (issued
Page 3 and 4: (iii) Banks including co-operative
Page 5 and 6: An operating lease is a lease other
Page 7 and 8: Leases 365 Unguaranteed residual va
Page 9 and 10: Leases 367 (c) the lease term is fo
Page 11 and 12: Leases 369 (b) In the above example
Page 13 and 14: Leases 371 19. The depreciable amou
Page 15 and 16: Leases 373 cancellable operating le
Page 17 and 18: Leases 375 (a) the profit or loss e
Page 19 and 20: Leases 377 42. Initial direct costs
Page 21: Leases 379 and it is clear that the

(AS) 19

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