Can you recognize revenue on asset sold and bought back at a later stage?

Can you recognize revenue on asset sold and...

Didn't find your answer?

Hi folks,

 

I have a situation where: we have sold some assets in the past to a client (hardware and Software including installation).

Now the idea is that we would like to buyback the same assets from the client and provide them a utility service price per user per month over 5 years term. The per user price will include the Hardware and Software bought back some additional new hardware plus the maintenance and management of the solution implemented.

My question is: since we would blend in the cost of the asset bought back in the per user price and therefore, generating revenue again on the same old assets, are we allowed to recognize the revenue again?

 

Thank you,

Brian

Replies (2)

Please login or register to join the discussion.

avatar
By cparker87
09th Dec 2013 13:40

Ask yourself.. Is it Revenue?

Yes.

Thanks (0)
avatar
By find-accountants.com
09th Dec 2013 14:19

Sale and leaseback

The transaction is “Sale and leaseback” transaction but you are the buyer in this case.  Sale and leaseback transactions are arrangements in which an entity sells an asset to a buyer and then immediately leases the asset back from the buyer. From accounting perspective things are not a simple as they look as Sale and leaseback transactions are viewed as a single transaction in which the sale and leaseback are interdependent and negotiated together as a package (IAS 17 58 Sale and leaseback transactions or whatever GAAP you are using) –hence there is an element of purchase and lease. However for small entities, you can draft your own accounting policies to simply things as long as you don’t diverge that much from the “generally accepted”.

Thanks (0)