Page 112 - FR Integrated Workbook 2018-19
P. 112
Chapter 9
Sale and leaseback
3.1 Is the transfer a ‘sale’?
If an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor)
and then leases it back, the seller-lessee must assess whether the transfer should be
accounted for as a sale.
In order to do this entities must apply IFRS 15 Revenue from Contracts with
Customers (see Chapter 12) to decide whether a performance obligation has been
satisfied.
3.2 Accounting treatment
Transfer is not a sale Transfer is a sale
Continue to recognise asset Derecognise the asset.
Recognise a financial liability Recognise a right-of-use
equal to proceeds received. asset as the proportion of
the previous carrying
amount that relates to the
rights retained.
Recognise a lease liability.
A profit or loss on disposal
will arise.
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