IFRS 16 Leases ended sale-and-leaseback transactions as an off-balance sheet financing proposition. However, it did not end the debates about sale-and-leaseback accounting.
Assessing sale and leaseback
The deals themselves are often highly structured and can be material, especially for seller-lessees, and accounting for them can be complex. Assessing whether a transaction qualifies for sale-and-leaseback accounting under IFRS 16 is a key judgement. Calculating the profit or loss on the sale is also not always intuitive.
Our Sale and leaseback (PDF 1.9MB) publication addresses practical questions we have encountered in applying IFRS 16.
Applying the latest amendments
Our publication also covers the amendments to IFRS 16 published in September 2022 addressing sale-and-leaseback transactions. It includes detailed worked examples showing how to account for sale-and-leaseback transactions that feature variable payments on initial recognition and subsequently.
