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Statement No. 28 Accounting for Sales with Leasebacks-an amendment of FASB Statement No. 13 STATUS Issue Date: May 1979 Effective Date: For leasing transactions and revisions recorded as of September 1, 1979 Affects: Supersedes FAS 13, paragraphs 32 and 33 Affected by: Paragraphs 3 and 23 through 25 amended by FAS 66 Other Interpretive Pronouncements: FTB 79-18 FTB 88-1 Issues Discussed by FASB Emerging Issues Task Force (EITF) Affects: No EITF Issues Interpreted by: Paragraph 2 interpreted by EITF Issues No. 88-21 and 93-8 Paragraph 3 interpreted by EITF Issues No. 86-17, 88-21, 89-16, and 93-8 Related Issues: EITF Issues No. 84-37, 87-7, and 89-20 Abbreviations for Accounting Pronouncements FAS - FASB Statements FIN - FASB Interpretations FTB - FASB Technical Bulletins APB - APB Opinions AIN - AICPA Interpretations ARB - Accounting Research Bulletins CON - FASB Concepts EITF - EITF Issues Q&A - FASB Implementation Guides SUMMARY Paragraph 33 of FASB Statement No. 13, Accounting for Leases, generally treats a sale-leaseback as a single financing transaction in which any profit or loss on the sale is deferred and amortized by the seller, who becomes the lessee. This Statement requires the seller to recognize some profit or loss in either of the following limited circumstances: If the seller retains the use of only a minor part of the property or a minor part of its remaining useful life through the leaseback, the sale and the lease would be accounted for based on their separate terms. However, if the rentals called for by the lease are unreasonable in relation to current market conditions, an appropriate amount would be deferred or accrued by adjusting the profit or loss on the sale. The amount deferred or accrued would be amortized as an adjustment of those rentals. If the seller retains more than a minor part but less than substantially all of the use of the property through the leaseback and the profit on the sale exceeds the present value of the minimum lease payments called for by the leaseback for an operating lease or the recorded amount of the leased asset for a capital lease, that excess would be recognized as profit at the date of the sale. Copyright by Financial Accounting Standards Board. All Rights Reserved. Used by Permission.
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