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Lease Liability in a Sale and Leaseback – International Accounting Standards Board

Date recorded:

At its meeting on December 14-16, 2021, the IASB discussed how the project should proceed. In particular, the IASB tentatively decided to confirm its proposals in the Exposure Draft subject to making a number of changes, as follows: (a) not prescribing how, at the commencement date, a seller-lessee determines the proportion of the previous carrying amount of the asset that relates to the right of use the seller-lessee retains; (b) requiring a seller-lessee to subsequently measure the liability arising from the leaseback by applying paragraphs 36–46 of IFRS 16; and (c) for the purposes of applying paragraphs 36–46 of IFRS 16, requiring the seller-lessee to apply the term ‘lease payments’ or ‘revised lease payments’ in such a manner that it does not recognize any amount of the gain or loss that relates to the right of use retained. At a future meeting the IASB will discuss the transition requirements for the proposed amendments, as well as the IASB’s compliance with applicable due process steps.

Review the IASB Update and podcast on the Board's Web site.

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