What is Sale-and-Leaseback Accounting?
Sale-and-leaseback accounting refers to a financial transaction where a company sells an asset and then leases it back from the buyer. This allows the business to free up cash while using the assets. Under accounting rules, whether the transaction is recorded as a sale or a financing arrangement depends on lease classification standards such as IFRS 16 or ASC 842.
Think of it like pawning your guitar. You get quick cash but can still rent it back, and you just have to pay a monthly cost.
