If a corporation adhering to IFRS sells machinery at fair value and then leases it back (sale-leaseback) as a finance lease, any gain on the sale should be
A) recognized in the year of "sale."
B) recorded as other comprehensive income.
C) deferred and amortized to income over the term of the lease.
D) deferred and recognized as income at the end of the lease.

Question

Quizplus · Accepted Answer

When a corporation adhering to IFRS sells machinery at fair value and then leases it back as a finance lease, any gain on the sale should be deferred and amortized to income over the term of the lease. This is because the sale of machinery is recognized as a financing transaction rather than a sale, and the gain on the sale is essentially interest income that should be recognized over the term of the lease.

If a Corporation Adhering to IFRS Sells Machinery at Fair