Answers · Sale & leaseback accounting treatment
How does a sale and leaseback show up in a company's accounts?
Direct answer
Under current Australian accounting standards, a business that enters a leaseback generally recognises a right-of-use asset and a corresponding lease liability on its balance sheet, reflecting the ongoing lease commitment, while the sale itself is accounted for separately. The precise treatment depends on the transaction's terms and the applicable standard, and should be confirmed with a qualified accountant.
In broad conceptual terms, modern lease accounting moved away from simply expensing rent as it's paid, toward recognising most leases on the balance sheet — hence the right-of-use asset and lease liability that typically appear once a business signs a leaseback. This changes how the arrangement looks in the accounts compared to the era when operating leases stayed off-balance-sheet.
Separately, the sale of the property itself is assessed under its own accounting rules, including whether the transaction is treated as a genuine sale for accounting purposes and how any difference between sale proceeds and the asset's carrying value is recognised. These are technical questions that turn on the specific facts of each transaction.
This is general information only, describing current accounting standards at a conceptual level — it is not accounting advice for any particular business. Get your own tax/legal/accounting advice on how a sale and leaseback would be treated in your accounts before proceeding.
Start a conversation
Tell us your requirement
Talk to us directly about the premises your business needs — to outgrow, to free up capital, or to have built. One conversation with the people who decide.
We work with agents. If you’re an agent with a tenant requirement you can’t place or an off-market opportunity, bring it to us.