ACCA SBR December 2026: The IFRS 16 Sale and Leaseback Gain Most Students Get Wrong

On an SBR sale and leaseback, you only recognise the gain relating to the rights you have actually transferred. Booking the full gain is the single most common way to lose marks on IFRS 16.

What the standard actually says

IFRS 16 first asks whether the transfer is a sale under IFRS 15. If it is not, the seller-lessee keeps the asset and books the proceeds as a financial liability. If it is a sale, the seller-lessee derecognises the asset, recognises a right-of-use (ROU) asset for the proportion of the old carrying amount that it retains, and recognises a gain only on the rights transferred to the buyer-lessor.

The ROU asset is measured at: carrying amount × (PV of lease payments ÷ fair value). That fraction is the proportion of the asset you are still using. It is not the lease liability and it is not fair value.

Examiners regularly flag the same pattern in SBR: candidates know the standard exists, then apply a normal disposal. The SBR question rewards the calculation and a short explanation of why the gain is restricted, so you need both.

Watch the fair value trap too. If the sale price is not at fair value, IFRS 16 requires an adjustment: a below-market price is treated as a prepayment of lease payments, and an above-market price as additional financing from the buyer-lessor. Check the numbers before you start.

Worked example

An entity sells a building with a carrying amount of $800,000 for its fair value of $1,000,000 and leases it back for 10 years. The PV of the lease payments is $600,000. The transfer qualifies as a sale.

Wrong answer: Dr Cash $1,000,000, Cr Building $800,000, Cr Profit $200,000. Then record the lease separately. This books the full $200,000 gain and ignores the rights retained.

Correct answer:

ROU asset = $800,000 × 600/1,000 = $480,000.
Total gain = $200,000. Gain relating to rights retained = $200,000 × 600/1,000 = $120,000. Gain recognised = $80,000.
Dr Cash $1,000,000, Dr ROU asset $480,000, Cr Building $800,000, Cr Lease liability $600,000, Cr Profit $80,000. Debits and credits both total $1,480,000.

What to do

1. Test for a sale first. Say in one line whether control has passed under IFRS 15. If it has not, stop: the proceeds are a financial liability and there is no gain.

2. Write the fraction before the numbers. Put PV of lease payments ÷ fair value at the top of your workings, then apply it twice: once to carrying amount for the ROU asset, once to the total gain for the retained portion.

3. Prove it with the journal. If your debits and credits do not balance, you have used the wrong fraction. A balanced journal is also easy for the marker to follow.

The bottom line

Leases is a core SBR area and sale and leaseback is the version that separates a pass from a near miss. It is a few minutes of work and a very predictable set of marks.

Restrict the gain, balance the journal, move on.