CERTYNEX IFRS ACADEMY

Grues Atlas sells a crane to a civil engineering company for EUR 800,000. The customer can require Atlas to repurchase the crane in three years for EUR 450,000, whereas the expected market value of the crane at that date is EUR 250,000; Atlas concludes (professional judgement) that the customer has a significant economic incentive to exercise its option. The transaction is not part of a sale and leaseback. How does Atlas account for the arrangement?

As a sale with a right of return, since the customer remains free not to exercise its option at maturity.

As a lease in accordance with IFRS 16.

As a financing arrangement, with a financial liability and interest.

As an outright sale of 800,000 on delivery, the option belonging to the customer only.