Ias 17
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 June 2013
My query is regarding the treatment of sale and lease back in case of operating lease,
why do we compare Carrying amount with Fair value , why not selling price, if compensation is given by lessor?
why do we compare Carrying amount with Fair value , why not selling price, if compensation is given by lessor?
CA Sourabh Agarwal
(Expert)
10 June 2013
Bcoz, IFRS are based on Fair Values. Any difference between carrying amount and fair value is taken to profit & loss. It focus on reflecting substance of transaction and shows that if transaction carried at fair values, what would have been the position in P/L.
Any further difference is not immediately recognized, rather deferred on the premise that future compensation is for free.
Only logic is Current values have effect on future arrangements between parties in substance.
Any further difference is not immediately recognized, rather deferred on the premise that future compensation is for free.
Only logic is Current values have effect on future arrangements between parties in substance.
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