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The International Accounting Standards Board (Board) has proposed to amend IFRS 16 Leases by specifying how a company measures the lease liability in a sale and leaseback transaction.

Sale and leaseback transactions are transactions for which a company sells an asset and leases that same asset back from the new owner.

IFRS 16 includes requirements for how to account for sale and leaseback transactions at the time the transaction takes place. However, it does not specify how to measure the lease liability when reporting after that date.

The proposed amendment would improve the sale and leaseback requirements already in IFRS 16 by providing greater clarity for the company selling and leasing back an asset both at the date of transaction and subsequently. By doing so, the amendment would help ensure the Standard is applied consistently to such transactions.

The proposed amendment would not change the accounting for leases other than those arising in a sale and leaseback transaction.

The comment letter period was open until 29 March 2021.