1. 11. Sale and Lease Back (SLB)
Sale and Lease Back is another method of finance. This method is generally applied by financers to enhance security.
Sale and Lease Back can be :
i) Sale & Financial Lease Back (Purchase Back)
ii) Sale & Operating Lease Back (Rent Back )

2. b) Sale and Financial Lease Back :
Whenever Sale and lease back is of financial nature, than any profit or loss on sale will be deferred and amortized in the ratio of Depreciation.
Deferred Income is shown as part of Reserve & Surplus.
Deferred Loss is shown as Miscellaneous Expenditure.

3. c) Sale and Operating Lease Back (SOL) :
Whenever asset is sold and taken back on Operating Lease.
In such cases asset are sold and accounting for sale is journalized.
Profit and Loss on sale is dealt as follows :
Step 1: Calculate and Journalize Impairment loss on asset sold.
= Carrying Amount – Fair Value
P&L a/c Dr
To Asset a/c
(Being Asset Impaired)

4. Step 2: Calculate Deferred Gain or Deferred Loss
Deferred Gain = Sale Value – Fair Value
Deferred Loss = Fair Value > Sale Price (For Testing Purpose Only)
Loss will be deferred if lease rentals are lower than Market Rate.
Bank a/c Dr (Sale proceed)
Deferred loss a/c Dr (Balancing Fig)
To Asset a/c (carrying amount after impair)
To Deferred Gain a/c (If any)
(Being asset Sold)
Step 3: Any gain or loss deferment will be recorded as Profit or Loss.

5. 12.Treatment of Operating Leases
Books of Lessee and Lessor.
Lease Rentals incurred are taken as Income or Expense for Lessor and lessee respectively.
Lease Rentals should be recognized on the basis of Benefit availed / Provided.
Benefits means advantage from right to use asset.
In such benefit can not be identified than apply SLM method approximately.

6. 10. Disclosure Requirements
Statement of lease Rentals : (Exemption)
Period Amount
0 – 12 Month
12 – 60 Month
60 & Beyond
********
Sublease Rentals received by lessee.
General Description of leasing Policies.

7. 14. This AS is not applicable on:
Land, mines, forests etc
Contingent rent is not included in lease rental but disclosed in lease rentals.