ca,Case Study 2 Sale and leaseback arrangements

ca,Case Study 2 Sale and leaseback arrangements - Case...

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Case Study 2 Sale and leaseback arrangements Kapiti Ltd is a company involved in a diverse range of activities involving power generation, machinery retailing and agriculture. The accounting policy note attached to the 2016 financial statements included the following under the heading ‘Leases’: During the year the company entered into a refinancing arrangement which involved the sale of the Lilac Mountain power station under a sale and leaseback arrangement. The difference between the carrying amount of the power station and its original cost has been included in profit and disclosed as a gain on sale of a non-current asset. Sales proceeds in excess of the original cost have been treated as deferred income in the statement of financial position. The amount of deferred income will be systematically amortised over the term of the lease. The power station is a unique asset in that the licence to generate power from that station is held by Kapiti Ltd and cannot be transferred. The leaseback
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  • Three '11
  • fanfhu
  • Accounting, Generally Accepted Accounting Principles, Power station, Kapiti Ltd

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