On June 30, year 1, Lang Co. sold equipment with an estimated
useful life of eleven years and immediately leased it back
for ten years. The equipment’s carrying amount was $450,000;
the sale price was $430,000; and the present value of the lease
payments, which is equal to the fair value of the equipment, was
$465,000. In its June 30, year 1 balance sheet, what amount
should Lang report as deferred loss?

(b) On a sale-leaseback, generally losses are recognized
immediately. However, there can be two types of losses in saleleasebacks.
The type that is recognized immediately is a real
economic loss, where the carrying amount of the asset is higher
than its FV. The type that is deferred is an artificial loss where
the sale price ($430,000) is below the carrying amount
($450,000), but the FV ($465,000) is above the carrying amount
($450,000). The loss in this problem ($450,000 – $430,000 =
$20,000) is an artificial loss that must be deferred.