Leasing is a widely used financing solution. It enables entities to access and use property, plant and equipment without incurring large cash outflows at the start. Leases may have accompanying service components which have certain disclosure requirements under IFRS 16. Similarly, in a sale and leaseback transaction, the roles of the buyer and seller are essentially reversed.
Key learning objectives:
What is a lease?
What are the requirements under IFRS 16 for both lease and service components?
What are the IFRS 16 optional exemptions?
What is a sale and leaseback transaction?