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In IAS 17 (Lease) in the leaseback transactions for Finance Lease on Shortage of proceeds over the carrying amount.


In IAS 17 (Lease) in the leaseback transactions for Finance Lease which says "Any excess of proceeds over the carrying amount is deferred and amortized over the lease term."  then,how will the Shortage of proceeds over the carrying amount be accounted?

asked Feb 28, 2014 in IAS 17 - Leases by Azreen Dha Level 1 Member (1,550 points)
edited Feb 28, 2014 by Azreen Dha

1 Answer

+1 vote
Hi Azreen  - welcome to the forum.

If the selling price is determined based on the fair value of the asset, then the carrying amount of your asset must be reduced to the recoverable amount and therefore an impairment loss must be recognised immediately. If the selling price is not based on the fair value of the asset, then you can defer the deficit in the same manner as a profit over the lease term.
answered Mar 1, 2014 by Tina Level 5 Member (11,560 points)
Thanks for the concern!
"defer the deficit" means here, that we should recognize the loss over the lease term.
Is that what you meant?
"defer the deficit" means here, that we should recognize the loss over the lease term.
Is that what you meant? You are correct.


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