Sale and leaseback: transfer is not a sale

Learning objectives

• Record a transfer that is not a sale: the seller-lessee continues to recognise the asset and recognises an IFRS 9 financial liability; the buyer-lessor recognises a financial asset.L3

Normative references

• IFRS 16 §103If the transfer is not a sale under IFRS 15: the seller-lessee continues to recognise the transferred asset and recognises a financial liability equal to the transfer proceeds, applying IFRS 9; the buyer-lessor does not recognise the transferred asset and recognises a financial asset equal to the transfer proceeds, applying IFRS 9.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

8 questions

• Valtène transfers a data centre to Infrabail and leases it back for 10 years. The contract gives Valtène an option to repurchase the centre. The IFRS 15 analysis provided in the file concludes that, because of this option, control of the centre is not transferred to Infrabail. The finance director nevertheless wishes to recognise a sale, since the deed of transfer has been signed. Which conclusion do you adopt?L3
• The conclusion of the IFRS 15 analysis of a sale and leaseback governs the whole of its subsequent accounting. Which statements about the consequences of that conclusion are correct?L2
• Torvale transfers a laboratory and leases it back. According to the IFRS 15 analysis provided, the transfer is not a sale. How does Torvale, the seller-lessee, account for the arrangement?L3
• Fidalys bank pays 4,000,000 to a manufacturer to acquire its factory, which the manufacturer immediately leases back. The IFRS 15 analysis concludes that the transfer is not a sale. How does Fidalys, the buyer-lessor, account for the arrangement?L3
• Grisol transfers an office building, with a carrying amount of {carrying_amount}, to a property company for cash of {proceeds}, and leases it back for 12 years. According to the IFRS 15 analysis provided, the transfer is not a sale. Record Grisol's entry at the transfer date.L3
• The coach operator Alvéo transfers its fleet of 20 coaches to a leasing company for {proceeds} and continues to operate it under a 4-year lease with a repurchase obligation. The fleet has a carrying amount of {carrying_amount} and a fair value of {fair_value}. The IFRS 15 analysis attached to the file concludes that control of the coaches is not transferred to the leasing company. Which entry does Alvéo record on receipt of the cash?L3
• Ostréa's year-end is approaching. During the year it transferred its head office (carrying amount 900,000) for 1,500,000 to an investor and leased it back; the IFRS 15 analysis in the file concludes that the transfer is not a sale. The accountant derecognised the building, recognised a gain of 600,000, then recognised a right-of-use asset and a lease liability. Which correction do you propose?L3
• Néphral transfers an automated warehouse (carrying amount 1,400,000) to Bailor for 2,000,000 and leases it back. The IFRS 15 analysis provided to both parties concludes that the transfer is not a sale. Immediately after the transaction, which presentation of the two statements of financial position is correct?L3