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Sale and Leaseback with Variable Payments (Amendments to IFRS 16)


At its April 2020 meeting, the Board discussed a recommendation from the IFRS Interpretations Committee to amend IFRS 16 to specify how a seller-lessee would apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in a sale and leaseback transaction.

The IASB tentatively decided to propose a narrow-scope amendment to IFRS 16 to specify that:

a) in applying paragraphs 36–38 of IFRS 16 to a sale and leaseback transaction with variable lease payments, a seller-lessee be required:

i. to determine the lease payments made as the payments included in the measurement of the lease liability. The payments included in that measurement are those that, when discounted using the discount rate described in paragraph 37, result in an amount equal to the carrying amount of the lease liability.

ii. not to remeasure the lease liability to reflect any reassessment of future variable lease payments.

iii. to apply paragraph 38 in accounting for any difference between the payments made for the lease and those included in the measurement of the lease liability.

b) in applying paragraphs 40 and 45 of IFRS 16 to lease modifications and changes in the lease term related to a sale and leaseback transaction, a seller-lessee be required to determine the revised lease payments as the revised expected payments for the lease.

The IASB also tentatively decided to develop an additional example that would illustrate how a seller-lessee would account for a sale and leaseback transaction with variable payments, both at the date of the transaction and subsequently throughout the lease term.

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