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Leases
Example 6.4
Big Ronnie has entered another sale and leaseback on a different smoke
machine with a longer useful life. The terms of the sale and leaseback
arrangement are exactly the same as those described in example 6.3 but, due
to the longer economic lifetime, the leaseback was classified as an operating
leaseback rather than a finance leaseback.
Required:
Show the entries required to record the sale and operating lease back
during the year ended 31st December 20X7.
139
