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Chapter 6
Example 6.3
Big Ronnie’s Disco Tours enters into a sale and leaseback arrangement on a
smoke machine and loudspeaker system which results in a finance leaseback
for 5 years from 1 January 20X7.
Details at 1 January 20X7 are as follows:
$000
Carrying amount of non-current asset 400
Sale proceeds 600
Fair value of non-current asset 520
The lease rentals are $200,000 per year in arrears. The implicit rate of the lease
was 27%.
Required:
Show the entries required to record the sale and finance lease back
st
during the year ended 31 December 20X7.
136
