IFRS 16 – Lease – Sale and leaseback accounting

Adviser alert – February 2019

The Grant Thornton International IFRS team has published Insights into IFRS 16 – Sale and leaseback accounting.

The latest bulletin Insights into IFRS 16 provides guidance on the accounting for sale and leaseback transactions.

IFRS 16 makes significant changes to accounting for sale and leaseback transactions.

A sale and leaseback transaction is a popular way for entities to secure long-term financing from substantial property, plant and equipment assets such as land and buildings.

It is a transaction where an entity (the sellerlessee) transfers an asset to another entity (the buyer-lessor) for consideration and leases that asset back from the buyer-lessor.

As IFRS 16 has withdrawn the concepts of operating leases and finance leases from lessee accounting, the accounting requirements that the seller-lessee must apply to a sale and leaseback transaction are more straightforward.

Download this bulletin which explains the new concepts and provides a simplified example of the requirements.