Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

EFRAG can accept that a temporary and faster solution to address the lack of guidance in IFRS 16, pending a more holistic review of the matter. However, EFRAG encourages the IASB to consider a simplified solution by recognising the profit attributable to the retained interest in the right-of-use asset as​ a non-lease liability or deferred income rather than a lease liability. This would avoid introducing two different definitions of lease payments depending on whether leases are entered into on a stand-alone basis or via a leaseback. 

For sale and leaseback transactions with variable payments only, the IASB could explore a further simplification by considering whether, instead of recognising separately a right-of-use asset and a non-lease liability (or deferred income) the two elements of the transaction could be presented on a net basis. ​

​Finally, EFRAG notes operational challenges associated with implementing the proposals in the ED that would require further consideration and guidance.

​The Final Comment Letter can be found here​.

On 11 May, EFRAG published a feedback statement ​summarising the main comments received by EFRAG on its draft comment letter and explaining how this considered by EFRAG during its technical discussions.

On September 22, 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) with amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.

The European Commission issued a letter requesting advice on the endorsement of the Amendments on 27 September 2022. The letter contains a standard request for advice on the endorsement that does not identify specific issues or areas to investigate.

EFRAG issued its Draft Endorsement Advice on 9 November 2022, which was open for consultation until 9 January 2023. In the letter, EFRAG’s preliminary assessment was that the Amendments satisfied the criteria for endorsement for use in the EU and therefore EFRAG recommended their endorsement.  

After considering the feedback received to its public consultation, EFFRAG issued its final Endorsement Advice on 30 January 2023 reiterating the intial assessment that the Amendments satisfied the criteria for endorsement for use in the EU and therefore EFRAG recommended their endorsement.