In conversion to leasing – or ‘sale and leaseback’ – the business sells an asset to Quadrent for fair market value and, in turn, takes on a lease for the equipment. Your business becomes the lessee and Quadrent becomes the lessor.
Before IFRS 16, conversion to leasing was often used in commercial sectors to free up capital which could be used to invest in business activities, pay off debts or buy core assets, while still having use of the asset.
Since the introduction of IFRS 16, you must satisfy the accounting rules for the sale of the asset before it goes onto your business’s balance sheet. This makes reporting obligations for this type of arrangement more onerous, but it’s still possible to manage this complexity. For example, Quadrent uses conversion to leasing contracts where equipment is purchased but still treated as a lease (rather than a sale and leaseback) to achieve a similar result.
A sale and leaseback structure allows companies to achieve a number of objectives including:
At the end of the lease term, you can:
Quadrent will proactively work with you to decide the best end of term solution for your business, ensuring there are no surprises
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