CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Lee sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a finance lease. According to IFRS, at the time of the sale, the gain should be reported as ______.
A. operating income
B. an extraordinary item, net of income tax
C. a deferred gain
Explanation: Gains on finance leases should be deferred.

User Contributed Comments 4

User Comment
kirsam it is a non-operational income - why not b?
jpducros in IFRS, there is no extraordinary item, so B is not possible.
Reginald Is this not a leaseback? Which under IFRS requires deferring and amortizing over the life of the asset
scottm8571 From the IFRS website:
Operating lease- gain and loss recognize immediately
Financing lease- deferred and amortized G/L
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