• Register
Search Questions / Answers

Welcome to AccountantAnswer Forum, where you can ask questions and receive answers. Although you need not be a member to ask questions or provide answers, we invite you to register an account and be a member of our community for mutual help. You can register with your email or with facebook login in few seconds

Get AccountantAnswer App

Accounting for sale and leaseback transactions (land & building)


How does one account for sale and leaseback transactions, particularly where one asset is totally written off or fully depreciated after a lease period while the other asset appreciates. For example buildings and land. From a lessee's perspective

asked May 7 in IFRS 16 - Leases by Gab

1 Answer

0 votes
The sale and leaseback accounting with the perspective of lessee will be as follows,
First of all lessee will reclassify property plant and equipment owned to leased hold land or property separately in the notes of property plant and equipment. All assets I,e fully depreciated assets, building and land will be recognized at lower of fair value of assets and minimum lease payment in case of the finance lease. If lease is operating lease then assets will not be recognized in the books of lessee. This also requires disposal of property plant and equipment,  particularly fully depreciated asset’s accumulated depreciation will be debited, assets will be credited any gain/loss will be debited or credited accordingly. In case of finance lease gain or loss on sale and leaseback will be deferred and will be realized over the time of lease term. In case of operating lease gain or loss will be recorded immediately.

If sale and leaseback transaction is finance lease then liabilities subject to finance lease will be recognized at balance sheet.
answered Nov 4 by Maher Ali Level 2 Member (4,360 points)


...