22. September 2022

IASB publishes narrow-scope amendment to IFRS 16 Leases

The International Accounting Standards Board (IASB) today issued the IFRS 16-Amendment Lease Liability in a Sale and Leaseback.

The amendment is based on a question to the IFRS IC regarding a sale and leaseback transaction involving variable lease payments. The IASB published a draft amendment on this matter in November 2020.

Although this draft was criticized by many national standard setters – including the ASCG – and EFRAG, the IASB decided to retain the following key proposals:

(a) The leaseback liability arising from a sale and leaseback transactions with variable payments not based on an index or rate is a lease liability to which IFRS 16 applies;

(b) The initial measurement requirements in paragraph 100(a) of IFRS 16 apply for the recognition of the right-of-use asset and the gain or loss arising from the sale and leaseback;

(c) The seller-lessee subsequently measures the right-of-use asset arising from the leaseback applying paragraphs 29-35 of IFRS 16.

Entities will be required to apply the amendments for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted.

For further information please visit the IASBs website.