I have some questions regarding the valuation and presentation of collateralized assets.
1. During the year, leasing company is returning the lease object from lessee who is not able to pay minimum lease payments. This returned lease object is intended for sale but does not meets the criteria to be classified as held for sale. Please be so kind to clarify how it should be presented in financial statements (PPE, inventory, investment property)*
2. The second question relates determining the value of returned lease object. For example, to the end of June 2009, total receivable from the lessee is 100 000 USD. From mentioned sum 70 000 is future payment and 30 000 is overdue amount. On 30th of June court imposed lessee to return leasing object and besides liability to recover overdue amount remain unchanged (30 000 USD). Should we assume that : 1. the cost of returned asset is 70,000 USD, remained 30 000 USD is receivable and because of low probability to receive this amount from lessee create provision . 2. the cost of returned asset is equivalent of total receivable -100,000USD, and we do not create any provision.
*Please note that lease object might be buildings as well as equipment.
