CERTYNEX IFRS ACADEMY

Granvelle transfers an office building to the investor Pierreval and leases it back for 8 years. According to the IFRS 15 analysis provided, the transfer is a sale. Which of the following statements correctly describes the accounting by both parties?

Granvelle recognises the whole gain on disposal and measures the right-of-use asset at the present value of the lease payments; Pierreval recognises the purchase of the building.

Granvelle measures the right-of-use asset at the proportion of the previous carrying amount relating to the right of use retained and recognises only the gain or loss relating to the rights transferred; Pierreval accounts for the purchase under the applicable standards and for the lease under the lessor requirements.

Granvelle measures the right-of-use asset at the fair value of the building and defers the whole gain over the lease term; Pierreval recognises a financial asset.

Granvelle recognises no gain until the lease has ended; Pierreval does not recognise the building.