CERTYNEX IFRS ACADEMY

Clinéquip sells 50 medical beds to a clinic for EUR 400,000. The clinic can ask Clinéquip to repurchase the beds in one year for EUR 120,000; the expected market value of the beds at that date is EUR 180,000 and Clinéquip concludes (professional judgement) that the clinic has no significant economic incentive to exercise its option. How is the arrangement accounted for?

As a lease in accordance with IFRS 16, since the repurchase price is lower than the original selling price.

As a financing arrangement, with the beds remaining in Clinéquip's assets.

As the sale of a product with a right of return.

As an outright sale of 400,000, the clinic's option having no accounting effect.