JOURNAL OF ACCOUNTING AND FINANCE
Sale and Leaseback Revisited
Author(s): Prakash Deo
Citation: Prakash Deo, (2018) "Sale and Leaseback Revisited", Journal of Accounting and Finance, Vol. 18, ss. 5, pp.10-22
Article Type: Research paper
Publisher: North American Business Press
Abstract:
The FASB’s Accounting Standards Update (ASU) is intended to improve financial reporting about leasing transactions including the sale and leaseback arrangements and will take effect as of December 15, 2018, for public companies. In this article, we present a methodology for a structured approach to sale and leaseback arrangements. First, we revisit and identify an array of issues and critical variables. Then, we utilize a spreadsheet model to illustrate the sale and leaseback arrangement with an example. Our model allows the lease to specify the terms of transactions, including lease payments, length and type of the lease, and other conditions. Finally, the model calculates the net present value of the transaction. The robust but simple model design can be customized to conduct any sensitivity analysis.