Sale and leaseback or sale and repurchase arrangements

Where a company is short of cash and needs a loan, it may “sell” an asset to a finance company for an inflated price and recognise the profit on sale

In exchange, the “buyer” (really a finance company) then leases the asset back to the company so the asset never actually leaves the premises

That “sale” (fully supported by a sales invoice and processed through the accounting records as the sale of an asset at a profit) is in fact merely an attempt to “disguise the substance of loan transactions” by our company in fact using this clever ruse to borrow money without that amount borrowed being shown as a loan, thus keeping the amount borrowed “off (the) balance sheet” (now properly referred to as the Statement of Financial Position)

Clearer?