Arvelo sells a business building to Capimmo for 2,200,000 and leases it back; the IFRS 15 analysis concludes that there is a sale. The fair value of the building, readily determinable, is 2,000,000; its carrying amount is 1,200,000. Arvelo uses, as the more readily determinable basis, the difference between the fair value of the consideration and that of the building. The contractual lease payments, payable at the end of each year, have a present value of 900,000, part of which repays the excess price (case assumption: its present value equals that excess). The proportion of the right retained is measured, as an assumption, by the ratio of the present value of the payments relating to the lease to fair value. Compute the additional financing, the right-of-use asset and the gain recognised.
- Contractual sale price
- 2,200,000
- Fair value of the building
- 2,000,000
- Carrying amount of the building
- 1,200,000
- Present value of the contractual lease payments
- 900,000