The IASB has issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases) that clarifies how a seller-lessee accounts for a sale and leaseback transaction after the date of the transaction.
IFRS 16 included requirements on how to account for a sale and leaseback at the date the transaction takes place. However, IFRS 16 did not specify subsequent measurement requirements for sale and leaseback transactions, which are now specified by the amendments. In applying the subsequent measurement requirements of lease liabilities to a sale and leaseback transaction, the amendments require a seller-lessee to determine ‘lease payments’ or ‘revised lease payments’ in a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use retained by the seller-lessee.
The amendments are effective for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. The amendments shall be applied retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application.
The IASB’s press release and the amendments may be accessed here
Source: BDO Global