2001 Volume 9 Issue 2 Pages 43-64
The purpose of this paper is (1) to examine the validity of three existing methods of measuring sales with leaseback transactions, and (2) to propose valid methods of measuring sales with leaseback transactions. Sales with leaseback transactions are designed to protect related parties when contracts are developed. Therefore, the purpose of a sale with a leaseback transaction determines the economic substance of the transaction. There are three classifications of sales with leaseback transactions. They are based on the following differences in the economic substance of the transactions; (1) mortgages involving borrowing by transfer; (2) purchase and sale transactions connected with an operating lease transaction, which does not need to be originally connected with them, and; (3) raising money by selling a lessee’s property at the highest possible price. Accordingly, a valid method of measuring sales with leaseback transactions is appropriate to reflect differences in the economic substance of each transaction.
