Manufacturer or dealer lessor
Under IFRS 16 a manufacturer or dealer lessor recognises selling profit or loss on a finance lease in accordance with the applicable requirements, reflecting the economics of a sale and financing. The lease classification, relevant fair values, present values and discount rate affect the amounts. This term describes the lessor’s role; it does not mean a manufacturer leases to a dealer who subleases to the customer.
Worked example
A machinery manufacturer leases a machine directly to a customer under a finance lease. It calculates the appropriate selling result and recognises a net investment in the lease, applying IFRS 16 rather than treating the transaction as a simple rental receipt.
Common mistake
Confusing a manufacturer or dealer lessor with a chain of manufacturer-to-dealer and dealer-to-customer leases, or recognising full cash selling price without applying the standard.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |