ABSTRACT
This chapter focuses on major accounting considerations involved in a sale-and-leaseback. The accounting rules are under scrutiny by the authorities in many countries, and some advantages of sale-and-leasebacks may be lost. A sale-and-leaseback is a particular form of financing. Under sale-and-leaseback deals, companies sell fixed assets, such as buildings, to a financial institution or other purchaser, thereby removing the asset's value and any associated liabilities, such as mortgages, from their balance sheets. In most cases, accounting treatments are the main reference of determining a sale-and-leaseback for tax purposes by tax authorities, although there is a difference in determining the sale-and-ieasebacks between from an accounting point of view and from a legal point of view. A normal leaseback which is defined as a lessee-lessor relationship that involves the active use of the property by the seller-lessee in consideration for payment of rent, including contingent rentals that are based on the future operations of the seller-lessee.
