Sigma Limited (SL) has a mining equipment with carrying amount 4,20,000 and useful life of the equipment
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Sigma Limited (SL) has a mining equipment with carrying amount ₹4,20,000 and useful life of the equipment is 5 years. On April 1, 2007, SL enters into a package deal with a Sampat Finance Limited (SFL) whereby it sells the equipment to SFL with the condition to take the equipment on lease by paying an annual lease rent of ₹1,40,000 per annum. The incremental borrowing cost SL is 14% per annum. Show how vendor–lessee should recognize it in its books of accounts.
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