Accounting Entries for Sale and Lease Back
Sale and lease back is a financing transaction between the lessee and lessor, where a person in need of funding sells their asset and then leases it back so that the asset remains with the seller and they enjoy its use through leasing.
The following is the criteria for the classification of a finance lease:
• Transfer of ownership to the lessee by the end of the lease term.
• The lessee has the option to purchase the asset at a price that ...
This solution defines the concept of 'sale and lease back' and explains what its accounting entries would be in the case of a finance lease.