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As19 Illustration 1
Accountancy
Question: X Ltd. sold JCB Machine having WDV of Rs.20 Lakhs to Y Ltd. for Rs.24 Lakhs and the same JCB was leased back of Y Ltd to X Ltd. The lease is operating lease. Comment according to relevant Accounting Standard if (v) Fair value is Rs. 18 Lakhs and sale price is Rs. 19 Lakhs Solution: (v) When fair value is Rs.18 lakhs & sale price is Rs. 19 lakhs, then the loss of Rs.2 lakhs (20-18) to be immediately recognized by A Ltd. in its books and profit of Rs.1 lakhs (19-18) should be amortized/ deferred over lease period. My doubt: shall we have to recognize the loss of 2 lakhs as impairment loss in the books of A ltd. ? Video Details ------------- P1 - Accounting Standards - CA Inter AS 19 #25. Illustration - I [May 2018]
Answers (3)
Thread Starter
Nagachaitanya NomulaSir should we have to compare the sale value of asset with 1) fair value or 2) cost of asset or 3) whichever is lower
it depends on different scenario. if sale price is higher than fair value, excess is ignored. if sale price is less than or equal to fair value - then sale price.