A seller-lessee sells a building to an unrelated buyer-lessor for cash of P2, 000,000.

The fair value of the building at that time is P1, 800,000; the carrying amount
immediately before the transaction is P1,000,000.
At the same time, the seller-lessee enters into a contract with the buyer-lessor for
the right to use the building for 18 years, with annual payments of P120, 000
payable at the end of each year. The interest rate implicit in the lease is 4.5%,
which results in a present value of the annual payments of P1, 459,200.
The transfer of the asset to the buyer-lessor has been assessed as meeting the
definition of a sale under IFRS 15.

Since FV of consideration > FV of asset, there is additional financing of P200,

000 (2m 1.8m)
The seller - lessee will recognize ROU asset in this proportion:

1, 459, 200 ( PV of Payments ) 200,000 ( Additional Financing)

x 1,000, 000 ( CA )=699,555
2, 000, 000200, 00( FV )

The seller lessee will recognize gain/loss in proportion to the ROU

transferred to buyer lessor. Total gain = 1, 800, 000 (SP adjusted by the
additional financing) 1, 000, 000 (Carrying amount) = 800, 000

1, 800, 0001, 2 59,200 ( PV of PaymentsAdditional Financing )

x 800, 000 ( CA )=240, 3 55
1, 800, 000( FV )

Entry:
Cash
2, 000, 000
ROU Asset
699, 555
Building
1, 000, 000
Lease Liability
1, 459, 200
Gain on sale and leaseback
240, 355