Accounting, Reporting & Tax
Sale and Leaseback Accounting
Summary
A sale and leaseback transfers an asset and leases back its use, potentially releasing cash while retaining operating capacity.
Why this matters in ship finance
For shipping, cash proceeds, accounting gain and lease liability can differ substantially, affecting leverage and return metrics.
The concept
IFRS 16 requires assessment of whether the transfer satisfies IFRS 15 sale requirements. If not, the transaction is accounted for as financing rather than a sale.
How it is used in practice
Compare asset transfer, retained right of use, lease payments, off-market terms, financial liabilities and gain recognition.
Practical issues
Do not call every sale-and-leaseback transaction an accounting sale. Legal title transfer and accounting derecognition are separate questions.
How ShipFinance.ai uses this concept
Provide a sale versus financing classification guide and pro forma balance-sheet example.
Key takeaways
- Legal sale and accounting sale are not necessarily identical.
- IFRS 16 depends on the IFRS 15 transfer assessment.
- Model retained use and financing liability separately.