Generally, the sale and repurchase and the sale and leaseback are not recognized revenue, and their processing ideas are as follows:
Sale and repurchase
When sending out the goods:
Borrow: bank deposits
Loan: other payables
Taxes payable- -VAT payable (output tax)
At the same time:
Borrow: Issuance of goods
Loan: Inventory goods
Interest accrued monthly on the difference between the repurchase price and the selling price:
Borrow: Finance costs
Loan: Other payables
Buying back goods:
Borrow: finance costs
Loan: other payables
Borrow: other payables
Taxes payable - VAT payable (input tax)
Loan: bank deposits
At the same time:
Borrow: goods in stock
Loan: goods issued Merchandise
If there is conclusive evidence that the sale and repurchase transaction meets the conditions for revenue recognition of the sale of merchandise, the merchandise sold will be recognized as revenue based on the selling price, and the repurchased merchandise will be treated as purchased merchandise.
Principles of Accounting for Sale and Leaseback Transactions
(1) Sale and Leaseback Transactions Forming Finance Leases
No revenue is recognized when the seller (lessee) sells the asset.
Unrealized gain or loss on sale and leaseback = selling price - book value of the asset
Assessment of unrealized gain or loss on sale and leaseback: assessed according to the progress of depreciation of the leased asset, i.e., assessed according to the same rate as the depreciation rate used for the leased asset, and adjusted for depreciation expense for each period.
(2) Sale and Leaseback Transactions Resulting in Operating Leases
①When there is conclusive evidence that a sale and leaseback transaction has been entered into on the basis of fair value, revenues are recognized on the basis of the selling price of the merchandise sold and costs are carried forward on the basis of the book value. Fixed assets sold are recognized as non-operating expenses based on the difference between the selling price and the carrying value of the fixed assets.
②There is no conclusive evidence that the sale and leaseback transaction was entered into at fair value:
If the selling price is less than the fair value, a gain or loss should be recognized for the current period, and if the loss is to be reimbursed by future lease payments that are less than the market value, the loss should be deferred and apportioned over the estimated useful life of the asset based on a proportionate share of the lease payments.
If the selling price is higher than the fair value, the excess of the selling price over the fair value shall be deferred and amortized over the expected useful life of the asset. The difference between the fair value and the carrying value of the sale and leaseback asset is recognized as profit or loss for the period.
II. Specific Accounting Treatment of Sale and Leaseback Transactions
1. Sale of Assets
(1) Upon Sale of Assets
Borrow: Accumulated Depreciation
Allowance for Impairment of Fixed Assets
Fixed Asset Liquidation
Loan: Fixed Assets
(2) Upon Receipt of Price for the Assets Sold
Debit: Bank Deposit
Credit: Fixed Assets Liquidation
(Credit or Debit): Deferred Gain - Unrealized Gain or Loss on Sale and Leaseback
2. Leaseback Assets
(1) Leaseback Assets to Form a Finance Lease
①When leasing back the asset:
Debit. Fixed Assets - Finance Lease Fixed Assets
Unrecognized Finance Costs
Credit: Long-term Payables - Finance Lease Payable
② Leaseback Asset Subsequent Periods:
Payment of Rent:
Leaseback Asset:
Borrow.
Borrow: Long-term payables - finance lease payable
Credit: Bank deposits
Assessment of unrecognized finance costs:
Borrow: Finance costs
Credit: Unrecognized finance costs
Accrual of depreciation:
Borrow: Overheads or manufacturing expenses, etc.
Credit: Accumulated depreciation
Assessment of unrealized gain or loss on leaseback:
Deferred income - unrealized gain or loss on leaseback
Credit (or debit): administrative expenses or manufacturing expenses, etc.
(2) Formation of leaseback assets An operating lease
①When leasing back an asset - no accounting treatment is needed, only a memo entry is required.
②Leaseback of assets in subsequent periods
③Payment of rent:
Borrow: administrative expenses or manufacturing costs, etc.
Credit: bank deposits
④Assessment of unrealized gains and losses on sale and leaseback:
Deferred income - unrealized gains and losses on sale and leaseback
Deferred income - unrealized gains and losses on sale and leaseback
Deferred income - unrealized gains and losses on sale and leaseback Leaseback Gains and Losses
Credit: Administrative Expenses or Manufacturing Expenses, etc.