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.

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