Final answer:
Sale-leaseback is a transaction where a company sells a property and leases it back. When the sale-leaseback involves a minor portion of assets, there can be operating gains, real economic losses, or artificial losses.
Step-by-step explanation:
Sale-leaseback refers to a transaction where a company sells a property to another party and then leasebacks the same property. When the sale-leaseback involves a minor portion of the assets, which is 10% or less, there are different scenarios that can occur: Operating Gain: If the net book value (NBV) of the asset is less than the fair value (FV), the company can recognize a gain from the transaction. This gain reflects the difference between the FV and NBV.
Loss (NBV > FV): If the NBV is greater than the FV, the company incurs a real economic loss. This loss represents the difference between the NBV and FV, indicating that the property was sold at a price lower than its value. Artificial Losses (SP < FV): In some cases, the property may be sold at a price lower than its fair value, resulting in artificial losses for the company. These losses are not reflective of the true economic value of the property.