The sale and balance are an effective mechanism for owners to realize some of the capital included in their land ownership or other business assets, while continuing their activities. It allows the seller to redistribute otherwise illiquid capital in the company and/or use that capital to reduce its debt. A sales and sales structure allows the investor to use a well-established management system that offers the investor a commitment to agricultural facilities without having to carry out the day-to-day operations of the farm business. Since IFRS 16 applies to IFRS 15 Revenue from contracts with customers to determine whether the transfer of an asset is recognised as an assignment and IFRS 15 is included in the scope of IFRS 13 for the fair value assessment, a lessee should refer to IFRS 13 when applying the sales and sales guidelines in IFRS 16. HopgoodGanim Lawyers` Agribusiness team has extensive experience advising sellers and buyers in structuring, documenting and completing sales and rentals of real estate and non-farm land. Please contact us if you would like more information. The customer bears the risk in a sales and rental contract. If they cannot pay the rents, PAR Leasing is responsible for the vehicle. Balances and obligations should be considered on a case-by-case basis and the requirements of individual transactions will vary, but each owner and investor considering a sale and lease transaction should evaluate carefully: while IFRS 13 Fair Value Measurement is generally the standard that provides guidelines at fair value, IFRS 13.6 (b) lease transactions recognised in accordance with IFRS 16. Fair value is defined by IFRS 16 itself, but the definition of fair value in IFRS 16, which differs from the definition of fair value in IFRS 13, is defined as „for the purposes of applying the lessor`s accounting rules in this Standard…“ First. It is therefore not clear what definition of fair value a seller/lessee should apply in IFRS 16 when applying the sales and lease guidelines. If you have opted for an operating lease, maintenance and operating costs may be included in the rent. Lend-lease, lease and secured credit agreements are generally not maintained, but we can supplement these agreements with our fleet management product to ensure that all vehicles are fully managed.
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