Endorsement of Lease Liability in a Sale and Leaseback

Background

On 22 September 2022 the IASB issued Lease Liability in a Sale and Leaseback, Amendments to IFRS 16 Leases.

The amendments add requirements explaining how a seller-lessee subsequently accounts for sale and leaseback transactions. 

In particular, the amendments require a seller-lessee to subsequently measure leaseback liabilities in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

The amendments also amend the existing Illustrative Example 24 of IFRS 16 and add a new example (Illustrative Example 25).  

The UKEB Secretariat submitted its Final Comment Letter on the Exposure Draft to the IASB on 26 March 2021. Further details can be found here.  

The amendments are effective for annual periods beginning on or after 1 January 2024, with early application permitted.