Sale-leaseback Example IFRS and ASPE . Company A sells a machine to Company B for its fair value of $ 2,000,000 on January 1,2018 . Company A immediately leases the machine back for 5 years . The useful life of the machine is 7 years . The implicit rate is 7% and the incremental borrowing rate is 6% The machine was recorded on Company A's books at $ 1,400,000 . The residual value at the end of 5 years is expected to be $ 400,000 and is not guaranteed