UK Endorsement Board secretariat publishes its final comment letter on the IASB's Exposure Draft ED/2020/4 Lease Liability in a Sale and Leaseback

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12 Apr, 2021

The UK Endorsement Board secretariat has published its final comment letter in response to the International Accounting Standard Board's (IASB's) Exposure Draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)'.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

In its final comment letter the UK Endorsement Board secretariat :

  • Supports the proposals in the ED as they provide guidance on an area not covered by the existing Standard which should reduce diversity of practice leading to consistency and comparability of financial statements.
  • Observes an inconsistency in the definition of a variable lease payment between that used in IFRS 16 and that proposed in the exposure draft, which could lead to potential inconsistency in financial reporting. 
  • Recommends that the IASB resolves this discrepency either during the finalisation of the ED or during the post implementation review of IFRS 16.  It proposes two potential solutions to the IASB. 

The final comment letter is available at UKEB website.

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