CERTYNEX IFRS ACADEMY

The shipyard Navires Corail sells a sailing yacht to a rental company for EUR 2,000,000. The contract requires Navires Corail to repurchase the yacht in 2 years for EUR 2,100,000 if the rental company so requests. At contract inception, the expected market value of the yacht at the repurchase date is estimated at EUR 1,500,000 (case data). The transaction is not part of a sale and leaseback. How does Navires Corail account for this arrangement?

As a sale with a right of return, since it is the customer that decides whether or not to request the repurchase.

As a financing arrangement: the yacht remains an asset, a financial liability of EUR 2,000,000 is recognised and the difference of EUR 100,000 is treated as interest.

As a lease in accordance with IFRS 16, because the customer has a significant economic incentive to request the repurchase.

As a sale of EUR 2,000,000 with revenue recognised on delivery of the yacht, the repurchase clause being disclosed in the notes.