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Thread: 09 - Indian Accounting Standard 17 - Earlier Accounting standard (19) - Leases

  1. #21
    IND-AS
    Guest

    Thumbs up Appendix - E of Indian Accounting Standard 17 - Earlier Accounting standard (19) - Leases

    Appendix - E of Indian Accounting Standard 17 - Earlier Accounting standard (19)

    Leases


    APPENDIX - E


    Guidance on implementing Ind AS 17 Leases

    This guidance accompanies, but is not part of, Ind AS 17.

    Illustrative examples of sale and leaseback transactions that result in operating leases

    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 t able below shows the requirements of the Standard in various circumstances.

    Sale price at fair
    value(paragraph 61)
    Carrying
    amount equal to
    fair value
    Carrying amount
    less than fair
    value
    Carrying
    amount
    above fair value
    Profit
    no profit
    recognise profit
    immediately
    not applicable
    Loss
    no loss
    not applicable
    recognise loss
    immediately
    Sale price below fair
    value(paragraph 61)



    Profit
    no profit
    recognise profit
    immediately
    no profit (note 1)
    Loss not
    compensated for by
    future lease
    payments at below
    market price
    recognise loss
    immediately
    recognise loss
    immediately
    (note 1)
    Loss compensated
    for by future lease
    payments at below
    market price Sale price above fair
    value (paragraph 61)
    defer and
    amortise loss
    defer and amortise
    loss
    (note 1)
    Profit
    defer and
    amortise profit
    defer and amortise
    excess profit (note
    3)
    defer and
    amortise profit
    (note 2)
    Loss
    no loss
    no loss
    (note 1)

    Note 1. These parts of the table represent circumstances dealt with in paragraph 63 of the Standard. Paragraph 63 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. Profit is the difference between fair value and sale price because the carrying amount would have been written down to fair value in accordance with paragraph 63.

    Note 3. The excess profit (the excess of sale price over fair value) is deferred and amortised over the period for which the asset is expected to be used. Any excess of fair value over carrying amount is recognised immediately.


  2. #22
    IND-AS
    Guest

    Thumbs up Appendix - 1 of Indian Accounting Standard 17 - Earlier Accounting standard (19) - Leases

    Appendix - 1 of Indian Accounting Standard 17 - Earlier Accounting standard (19)

    Leases


    Appendix - 1

    Note:
    This appendix is not a part of Indian Accounting Standard (Ind AS) 17, Leases. The purpose of this Appendix is only to bring out the major differences between this Indian Accounting Standard and the corresponding International Accounting Standard (IAS) 17, Leases.

    Comparison with IAS 17, Leases

    1. Paragraphs 18 of IAS 17 dealing with measurement of the land and buildings elements when the lessee’s interest in both land and buildings is classified as an investment property in accordance with Ind AS 40 Investment Property if the fair value model is adopted and paragraph 19 of IAS 17 dealing with property interest held under an operating Lease as an investment property, if the definition of
    investment property is otherwise met and fair value model is applied, have been deleted, since Ind AS 40, Investment Property, prohibits the use of fair value model. However, paragraph numbers have been retained in Ind AS 17 to maintain consistency with paragraph numbers of IAS 17.

    2. Paragraph numbers 14 and 15 appear as ‘Deleted‘ in IAS 17. In order to maintain consistency with paragraph numbers of IAS 17, the paragraph numbers are retained in Ind AS 17.

    3. The transitional provisions given in IAS 17 and IFRIC 4 have not been given in Ind AS 17, since all transitional provisions related to Ind ASs, wherever considered appropriate, have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards corresponding to IFRS 1, First-time Adoption of International Financial Reporting Standards.

    4. Different terminology is used in this standard, e.g., the term ‘balance sheet’ is used instead of ‘Statement of financial position’ and ‘Statement of profit and loss’ is used instead of ‘Statement of comprehensive in come’.


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