Transaction
Since the price and rental assets in a sale and leaseback transactions are interrelated, is a package through negotiations, is calculated together, and therefore the sale of assets leaseback essentially with a business. Therefore, the sale of assets and losses should be amortized and should not be recognized as profit or loss of the sale. If a sale and leaseback gains and losses are recognized as profit or loss for sale, it may not accurately reflect business performance. For example, if the lease arrangements for the high price of high rent, the lease arrangements for the buyer (ie the lessor) does not adversely affect the present, but for the seller (ie the lessee) is concerned, at the time of sale of assets, although there are huge amounts of revenue, but this is a future periods to pay high rent for the price. On the other hand, if the low price low rent lease arrangements. This lease arrangements for the buyer (ie the lessor) there is no adverse effect, but for the seller (ie the lessee) is concerned, although all subsequent payments of rents are lower, but the sale will generate huge losses. Therefore, for real, reasonably reflect the operating results of the lessee, and in accordance with the requirements of the principle of accrual, sale and leaseback of any gains and losses resulting from transactions shall after each benefit period were assessed using a reasonable method, therefore, does not sale and leaseback gains and losses should be recognized in profit or loss. But it should be deferred, apportioned to each of the profit and loss (whether profit or loss).
accounting treatment
About
For the sale and leaseback transaction, whether the lessor or lessee shall be in accordance with Accounting Standards, the sale and lease back to the transaction as a finance lease or an operating lease. For the lessor in terms of sale and leaseback transaction (either a finance lease or operating lease sale of leaseback transaction) is no different with the accounting treatment of other leasing business. For tenants in terms of both its assets because the lessee is also the seller of the assets, therefore, sale and leaseback transaction with different accounting treatment of other leasing business. Therefore, the accounting standards of the sale and leaseback transaction rules are actually from the perspective of the lessee (ie the seller) is made.
accounting treatment of sale and leaseback transactions should be based on the type of lease they are formed, according to the finance lease and operating lease accounting treatment, respectively.
(a) sale and leaseback transaction accounting treatment of lease financing
If a sale and leaseback transaction meets any one or several of Article 5 standards in accounting standards, the transaction should be classified as a finance lease. This transaction transfers substantially buyer (ie the lessor) with all the risks and rewards of ownership of the leased asset related to retained is the lessor and the lessee to provide funds to the asset as collateral, therefore, the price in fact overvalued at the time of the sale and the difference between the book value of the assets (either price in excess of book value or lower than the book value of assets) were not realized in the accounting, its essence is priced higher than the book value of assets the value of the assets, while the price is lower than the book value of the assets actually underestimate the value of the asset at the time of the sale, therefore, the seller (ie the lessee) shall be the difference between the selling price and the book value of assets (whether high price lower than the book value of assets at book value or price of the asset) be deferred, according to the depreciation of the leased assets amortized as an adjustment to depreciation costs. Its accounting treatment as follows: When
⒈ sale of assets, debit "fixed assets", "accumulated depreciation", and other subjects, credited "fixed assets", and other subjects. When
⒉ receive the proceeds of the sale of assets, debit "bank deposit", credited to "fixed assets" and other subjects, debit or credit "deferred income - unrealized sale and leaseback profit and loss (finance lease) "subjects.
(b) the sale and leaseback transaction accounting treatment of operating leases
If any of a sale and leaseback transaction did not meet the five criteria set accounting standards, it should be the transaction is recognized as operating leases. And the sale and leaseback accounting treatment of unrealized gains and losses consistent with the formation of a finance lease, the lessee is balanced gains and losses for each period, the seller (ie the lessee) shall be the difference between the selling price and the book value of assets (whether it is a high price deferred assets at book value or below the book value of assets) and amortized in accordance with the proportion of rent paid over the lease term. That is, the difference between the sale and leaseback unrealized gains and losses using the same accounting principles and form of financial leasing sale and leaseback transaction, but not according to the requirements of the principle of prudence, it will be priced lower than the book value of assets immediately recognized as loss. Its accounting treatment is:
⒈ when the sale of assets, debit "fixed assets", "accumulated depreciation", "main business costs" and other subjects, credited "fixed assets", "Finished "and other subjects.
When ⒉ acknowledge receipt of the purchase price receivable price, debit "bank deposits", "accounts receivable" and other subjects, credited "fixed assets", "main business income", "payable taxes - VAT, "and other subjects, debit or credit" deferred income - sale and leaseback unrealized gains and losses (operating lease) "subjects.
(c) Unrealized gains and losses share sale and leaseback accounting treatment
⒈ under a finance lease, the lessee should be set to "deferred income - unrealized gains and losses sale and leaseback (finance lease), "subject to a separate account for the sale and leaseback difference between the sales proceeds and the carrying amount of an asset deal (either price in excess of book value or lower than the book value of assets).
finance lease
Under a finance lease, depreciation of the leased asset allocation of unrealized gains and losses should serve as a sale and leaseback current period depreciation expense adjustment items. This is because the two sides could be generated by leasing deliberately raised or lowered payments of hire sales gains and losses, resulting in inflated assets minus or virtual, each of depreciation expense inflated or imaginary reduced for each income statement balance, share of unrealized after-sales leaseback gains and losses should be adjusted depreciation. Be apportioned according to the depreciation schedule means that at the time of the leased asset depreciation, the depreciation rate in the same proportion with the depreciation of assets used for the sale and leaseback unrealized gains and losses are apportioned. Its accounting treatment as follows: Each share of "Deferred income - sale and leaseback unrealized gains and losses (financial leasing)" sale and lease back to the unrealized gains and losses, debit or credit based on the depreciation of the leased asset accounts, loans or debit note "manufacturing costs - depreciation", "operating expenses - depreciation", "administrative expenses - depreciation expenses" and other subjects.
operating lease
⒉ under an operating lease, the lessee should be set to "deferred income - sale and leaseback Unrealized gains and losses (operating lease)," to be accounted for separately in a sale and lease back in the difference between the transaction price and the book value of the assets (either price in excess of book value or lower than the book value of assets).
Under an operating lease, according to the proportion of the rent paid over the lease term share of unrealized gains and losses should serve as a sale and leaseback adjust the current rental cost of the project; apportioned according to the proportion of the rent paid in the current period refers to confirmation when the rental cost of the leased asset, in the same proportion that are recognized as current period expenses to pay rent on the proportion of unrealized gains and losses are apportioned sale and leaseback. Its accounting treatment is:
periods when the share sale and leaseback unrealized gains and losses, debit or credit, "according to the proportion of deferred income to pay the rent of the leased assets - sale and leaseback unrealized gains and losses (operating lease) "account, credit or debit" manufacturing costs - lease fee "and" operating expenses - leasing fee "and" management costs - lease fees "and other subjects.