AASB 15 Revenue from Contracts with Customers B64-B76: Account for repurchase agreements by their form: forward or call as a lease or financing, and put options by repurchase price and the customer's economic incentive

What does B64-B76 require?

Where the entity must, or may, buy the asset back (a forward or a call), the customer has not obtained control: a repurchase price below the original selling price is accounted for as a lease under AASB 16 (unless part of a sale and leaseback), and a repurchase price at or above the original price as a financing, with the asset kept on the books, the consideration recognised as a financial liability and the difference recognised as interest or processing costs; the liability is derecognised and revenue recognised if an option lapses unexercised. Where the customer holds a put option, the entity judges at inception whether the customer is strongly motivated economically to exercise it (repurchase price versus expected market value, time to expiry): if so, and the repurchase price is below the original price, the arrangement is a lease; if not, it is treated as a sale carrying a return right; a repurchase price at or above the original price and above expected market value is a financing. Prices are compared on a time-value-adjusted basis.