An entity applies the requirements retrospectively to sale and leaseback transactions that were entered into after the date when the entity initially applied IFRS 16. For example, an entity that initially applied IFRS 16 from IAS 17 as of 1 January 2019 (as many IFRS reporters did) would apply the amendments to sale and leaseback transactions that were entered into after 1 January 2019.

The use of hindsight is not permitted when retrospectively applying the amendment. For example, an entity that uses the expected lease payment approach to subsequently measure the lease liability, as illustrated in Example 2, should use the estimates that were applicable at the relevant measurement date(s) that reflect circumstances that existed at those dates to estimate lease payments.

The amendments do not apply to sale and leaseback transactions entered into before the date when the entity initially applied IFRS 16. These leases would continue to be accounted for consistently with the original transitional provisions of IFRS 16, which require a seller-lessee in a sale and leaseback transaction that was accounted for as a sale and operating lease under IAS 17 to account for the leaseback in the same way as any other operating lease.

Where an entity applied IFRS for the first time after 1 January 2019, it would have applied IFRS 16, including any permitted exemptions in IFRS 1, in measuring all recognised right-of-use assets and lease liabilities on the date of transition to IFRS. In addition, similar to existing IFRS reporters being able to early adopt IFRS 16, first-time adopters prior to 1 January 2019 might have early adopted IFRS 16 in their first set of IFRS financial statements. We believe that an entity that applied IFRS 16 in its first set of IFRS financial statements would apply the sale and leaseback amendments retrospectively to transactions entered into after the date of transition to IFRS.

An opening statement of financial position should be presented where retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period. In accordance with paragraphs 40A-40D of IAS 1, the third statement of financial position is presented as at the beginning of the preceding period, regardless of whether the entity’s financial statements also present comparative information for earlier periods. Entities might also need to consider any incremental regulatory requirements related to the presentation of financial statements where there is retrospective application.