BC294A The IASB decided to require a seller-lessee to apply the amendments retrospectively in accordance with IAS 8. The IASB expects the benefits of retrospective application to outweigh the expected costs because:

(a) sale and leaseback transactions often involve the sale of high-value items of property, plant and equipment with long economic lives. The accounting for such transactions could have a long-term material effect on the financial position of a seller-lessee. It is therefore important for users of financial statements that seller-lessees apply IFRS 16 consistently to those transactions.

(b) the amendments are expected to affect only the subsequent measurement of lease liabilities arising from a sale and leaseback transaction:

(i) with variable lease payments;

(ii) occurring from the date of initial application of IFRS 16 (1 January 2019 for most seller-lessees); and

(iii) for which the seller-lessee’s accounting policy differs from the requirements specified in these amendments.

(c) the amendments do not require the seller-lessee to estimate expected lease payments. The seller-lessee could use the carrying amount of the lease liability at the commencement date - determined applying paragraph 100(a) - to develop its accounting policy for determining ‘lease payments’ as required by paragraph 102A.