If the leaseback is an operating lease, the seller-lessee has
disposed of substantially all the risks and rewards of ownership of
the asset, and so has realised a profit or loss on the disposal.
Therefore both the sale and the lease are usually recognised as
such. However, as under UK GAAP, the situation can be complicated
if the sale is other than at fair value.
Sale at fair value
Where the sale is at fair value any profit or loss should be
recognised immediately.
Sale at above fair value
If the sale price is above fair value, the excess over fair
value shall be deferred and amortised over the period for which the
asset is expected to be used.
Sale at below fair value
If the sale price is below fair value any profit or loss
should be recognised immediately, unless the loss is compensated
for by future lease payments at below market price. In this case
the loss shall be deferred and amortised in proportion to the lease
payments over the period to which the asset is expected to be
used.
