Before the research, I had no idea about the sale-leaseback section of leases. By definition, the sale-leasebacks are considered actions in business that comprise property sale and no repurchases. The owner can exercise the sale-leaseback. An example is that for the sale-leaseback arrangement, the seller-lessee (one company) transfers a particular property or asset to the buyer-lessor (different company) and later leases the property or asset back from the receiving company (the buyer-lessor). From such a case, the owner can lease back to the seller a similar property (Kieso et al., 2020). It is noteworthy that the sale-leaseback helps in higher returns earned for the part of the buyer-lessor as compared to traditional financing. The dollar amounts associated with sale-leaseback types of transactions are regarded as significant. For a fact, sale-leasebacks are common. Financial organizations have incorporated sale-leaseback in public utilities and administration for their various plants. FASB codification asserts that the sale-leaseback transactions need to be disclosed in entirety to the financial statements’ stakeholder (Kieso et al., 2020). The disclosure is imperative when it comes to the decision making process. As per standards, the conclusion of a business is determined by a leaseback or sale at the time when conditions of the assets' sales have been attained. The differences in the normal leases, sales, property purchases, and lease-back need to be indicated. The question to post is if the lease contract comprises of the characteristics of the sale-leaseback, should the description of the lease be described or explained? As such, the repurchase of the asset is not necessary as may be defined by the lessee.
References
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting IFRS. John Wiley & Sons.
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