A sale-and-leaseback happens when you sell an asset you own and then immediately lease it back from the buyer. Instead of recording these as two unrelated transactions, this feature lets you capture the sale and the new lease together, so the gain on the sale and the new right-of-use asset are calculated correctly from day one. Use this when you're setting up a brand-new lease that came from selling an asset you used to own. For example, selling a building and leasing back the floor you still need.

First, to access this feature, you need to enable it in the Lease Setup page, under the Accounting Settings tab.

After that, create a lease as you normally would.

On the Lease Agreement Card, find the Sales and Leaseback section and fill in:

• Cash received for sale - how much cash you received for selling the asset.
• Carried Cost - the asset's book value right before the sale.
• Percentage Leased - how much of the asset you're leasing back. If you're leasing back everything, leave this at 100%; if you're only keeping part of it (e.g., one floor of a building you sold), enter that percentage instead.
• RoU Transfer Method - how the new right-of-use asset's starting value should be worked out (based on the lease liability, or based on the carrying amount). This affects how much gain is recognized immediately versus carried forward with the leased asset.

Below is an example of how these fields can look:

Click Activate, same as you would for any other lease. With the example above, here is how the activation entries would look with sales-and-leaseback enabled:

In the example above, the RoU is calculated proportionally based on the ratio of cash and lease liability to the carrying amount and RoU asset.

When the RoU Transfer Method is based on Carried Cost, the carried cost becomes the new RoU amount.