How does a sale and leaseback transaction work?

A sale and leaseback transaction is one where an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor) for consideration and leases that asset back from the buyer-lessor.

When to use sale and leaseback accounting in IFRS 16?

Sarah Carroll 12 Feb 2019 IFRS 16 makes significant changes to sale and leaseback accounting. A sale and leaseback transaction is one where an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor) for consideration and leases that asset back from the buyer-lessor.

Can a SLB fail during the leaseback phase?

Then, the leaseback operating lease becomes a finance lease for the seller-lessee and a sales-type lease for the buyer-lessor. Also, an SLB fails if the seller-lessee guarantees the value of the leased asset during the leaseback phase.

Who is required to account for sale and leaseback?

Another key change is that both the seller-lessee and the buyer-lessor are required to apply IFRS 15 to determine whether to account for a sale and leaseback transaction as a sale and purchase of an asset

Who is the lessee in sale and leaseback?

Sale and Leaseback transactions are common in the Real estate investment trusts (REITs) and Aviation industry. The person who buys the assets and lets out on lease is called the investor or landlord. The seller of the asset is also the lessee. Example of Sale and Leaseback

How is sale and leaseback accounting in IAS 17?

A sale and leaseback transaction [ 77 kb ] is a popular way for entities to secure long-term financing from substantial property, plant and equipment assets such as land and buildings. IAS 17 covered the accounting for a sale and leaseback transaction in considerable detail but only from the perspective of the seller-lessee.