Accounting Standards
Quick practice
Question 1 of 5
J Ltd. sold machinery having WDV of Rs. 40 lakhs to S Ltd. for Rs. 50 lakhs and the same machinery was leased back by S Ltd. to J Ltd. The leaseback is in nature of the operating lease.
You are required to explain the treatment in the given case:
- Fair value is Rs. 45 lakhs
A
Recognize profit Rs. 10 lacs immediately
B
Recognize profit Rs. 5 lacs immediately
C
None of the above
D
Recognize Rs. 5 lacs immediately and rest Rs. 5 lacs will be deferred
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