The sale and leaseback accounting with the perspective of lessee will be as follows,
First of all lessee will reclassify property plant and equipment owned to leased hold land or property separately in the notes of property plant and equipment. All assets I,e fully depreciated assets, building and land will be recognized at lower of fair value of assets and minimum lease payment in case of the finance lease. If lease is operating lease then assets will not be recognized in the books of lessee. This also requires disposal of property plant and equipment, particularly fully depreciated asset’s accumulated depreciation will be debited, assets will be credited any gain/loss will be debited or credited accordingly. In case of finance lease gain or loss on sale and leaseback will be deferred and will be realized over the time of lease term. In case of operating lease gain or loss will be recorded immediately.
If sale and leaseback transaction is finance lease then liabilities subject to finance lease will be recognized at balance sheet.