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Hi Mike,
Could please confirm the following,
1- Is the new standard on lease going to be tested for UK paper from September 2017?
2- Sale and lease back
Will there be any different from old lease standard (IAS17) to new standard
to answer the question Sale and lease back, where the arrangement was merely to raise the finance.Many thanks
1) Yes
2) Not sure that I have understaood your second point
But here’s an extract from the IASPLUS website on IFRS 16
“Sale and leaseback transactions
To determine whether the transfer of an asset is accounted for as a sale an entity applies the requirements of IFRS 15 for determining when a performance obligation is satisfied. [IFRS 16:99]
If an asset transfer satisfies IFRS 15’s requirements to be accounted for as a sale the seller measures the right-of-use asset at the proportion of the previous carrying amount that relates to the right of use retained. Accordingly, the seller only recognises the amount of gain or loss that relates to the rights transferred to the buyer. [IFRS 16:100a)]
If the fair value of the sale consideration does not equal the asset’s fair value, or if the lease payments are not market rates, the sales proceeds are adjusted to fair value, either by accounting for prepayments or additional financing. [IFRS 16:101]”
Does that answer you?
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