Purchase of asset with put option
Posted: 14 Dec 2022, 15:37
Hi All,
We buy the asset (purchase price 400000), paid in installment of 4000 monthly. Also we have a right to sell the asset back to the original seller at the price (400000-installments paid) at the end of 12 months and Original seller has the obligation to buy.
if we initially decide to sell - is this transaction considered as lease and recognise Right of use asset and lease liability ?
If we initially decide to retain the asset - can we capitalise the asset and show trade payables or it is financial liability if the payment is 4000 monthly for 100 months?
Thanks,
Anuradha
We buy the asset (purchase price 400000), paid in installment of 4000 monthly. Also we have a right to sell the asset back to the original seller at the price (400000-installments paid) at the end of 12 months and Original seller has the obligation to buy.
if we initially decide to sell - is this transaction considered as lease and recognise Right of use asset and lease liability ?
If we initially decide to retain the asset - can we capitalise the asset and show trade payables or it is financial liability if the payment is 4000 monthly for 100 months?
Thanks,
Anuradha