{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/40/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"842","topic_title":"Leases","subtopic":"842-40","subtopic_title":"Sale and Leaseback Transactions","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-30-1","para":"30-1","html":"
An entity shall determine whether a sale and leaseback transaction is at fair value on the basis of the difference between either of the following, whichever is more readily determinable:
  1. a
    The sale price of the asset and the fair value of the asset
  2. b
    The present value of the lease payments and the present value of market rental payments.
","snippet":"An entity shall determine whether a sale and leaseback transaction is at fair value on the basis of the difference between either of the following, whichever is more readily determinable:\n(a) The sale price of the asset …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95701c557e78c519952b8cb52eaa4d9df4f02e0590225fb083c7baa16e640f21","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-2","para":"30-2","html":"
If the sale and leaseback transaction is not at fair value, the entity shall adjust the sale price of the asset on the same basis the entity used to determine that the transaction was not at fair value in accordance with paragraph 842-40-30-1. The entity shall account for both of the following:
  1. a
    Any increase to the sale price of the asset as a prepayment of rent
  2. b
    Any reduction of the sale price of the asset as additional financing provided by the buyer-lessor to the seller-lessee. The seller-lessee and the buyer-lessor shall account for the additional financing in accordance with other Topics.
","snippet":"If the sale and leaseback transaction is not at fair value, the entity shall adjust the sale price of the asset on the same basis the entity used to determine that the transaction was not at fair value in accordance with…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05fb83c8cc29a954dc411898315e818aa987e552d3f8e744cdf1be1ba4977bd8","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-3","para":"30-3","html":"
A sale and leaseback transaction is not off market solely because the sale price or the lease payments include a variable component. In determining whether the sale and leaseback transaction is at fair value, the entity should consider those variable payments it reasonably expects to be entitled to (or to make) on the basis of all of the information (historical, current, and forecast) that is reasonably available to the entity. For a seller-lessee, this would include estimating any variable consideration to which it expects to be entitled in accordance with paragraphs
606-10-32-5 through 32-9
.
","snippet":"A sale and leaseback transaction is not off market solely because the sale price or the lease payments include a variable component. In determining whether the sale and leaseback transaction is at fair value, the entity …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c5420ce05564a69e28ee8445114eab790e094cae79cb47ec5c6ab99da63b2a4","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-4","para":"30-4","html":"
If the transaction is a related party lease, an entity shall not make the adjustments required in paragraph 842-40-30-2, but shall provide the required disclosures as discussed in paragraphs 842-20-50-7 and 842-30-50-4.
","snippet":"If the transaction is a related party lease, an entity shall not make the adjustments required in paragraph 842-40-30-2, but shall provide the required disclosures as discussed in paragraphs 842-20-50-7 and 842-30-50-4.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79daf7bcd439154e4ef242d483a4bd45c36f77c52cb605588bf556baefab987b","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-5","para":"30-5","html":"
See Examples 1 and 2 (paragraphs
842-40-55-22 through 55-38
) for illustrations of the requirements for a sale and leaseback transaction.
","snippet":"See Examples 1 and 2 (paragraphs 842-40-55-22 through 55-38) for illustrations of the requirements for a sale and leaseback transaction.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35ed03e1bddbf8f3f260bb89c96cc0d0b07a77304c29484499f369b0dacde2c4","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0940232f0d8d7dde888d1fae4a2c2e5f644e7f2fbf51a7889df81af1be5ca31c","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"block":null,"heading":"Transfer of the Asset Is Not a Sale","paragraphs":[{"citation":"842-40-30-6","para":"30-6","html":"
The guidance in paragraph 842-40-25-5 notwithstanding, the seller-lessee shall adjust the interest rate on its financial liability as necessary to ensure that both of the following apply:
  1. a
    Interest on the financial liability is not greater than the payments on the financial liability over the shorter of the lease term and the term of the financing. The term of the financing may be shorter than the lease term because the transfer of an asset that does not qualify as a sale initially may qualify as a sale at a point in time before the end of the lease term.
  2. b
    The carrying amount of the asset does not exceed the carrying amount of the financial liability at the earlier of the end of the lease term or the date at which control of the asset will transfer to the buyer-lessor (for example, the date at which a repurchase option expires if that date is earlier than the end of the lease term).
","snippet":"The guidance in paragraph 842-40-25-5 notwithstanding, the seller-lessee shall adjust the interest rate on its financial liability as necessary to ensure that both of the following apply:\n(a) Interest on the financial li…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:52e1f5d9148071eb2403222ac9be62db3afcf6aed98e800549cef5d33d61e477","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3ef44155b25148dac721ac90d36bc5e750ce028c83e4085edb26aa1b521e93b","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7431503c4b832d7131977e41a8e23617bbc44d50ba630ce15d657e937a619b90","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7431503c4b832d7131977e41a8e23617bbc44d50ba630ce15d657e937a619b90","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}