Accounting for leases 3 slides

Accounting for leases 3 slides - ACCT6001 1 1 ACCT2011...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ACCT6001 1 1 ACCT2011 Financial Accounting A Accounting for Leases Week 5 Dr Isabel Gordon 2 Required Reading • Deegan –Chapter 10 • Handbook – AASB 117 Leases 3 Lecture Objectives • Overview of leases & objectives of accounting for leases; • Distinguish operating and finance leases; • Identify key terms; • Examine how lessees account for finance & operating leases (also consider lessor accounting) • Discuss the financial statement effects of classifying / recognising leases and associated economic consequences • Separation of financing from operating leases important as may affect total debt and debt/assets ratio ACCT6001 2 4 Lecture Outline 1. Overview of leases a) Definition of a lease b) Advantages of leasing. c) Objectives of accounting for leases d) Lease agreement 2. Lease classification a) “Operating” versus “Finance” b) Indicators of a finance lease 5 Lecture Outline (Cont’d) 3. Key terms used in accounting for leases a) Fair value b) Non-cancellability c) Contingent rent d) Transfer of ownership e) Bargain purchase option f) Lease term g) Economic life h) Minimum lease payments i) Interest rate implicit in the lease Worked problem and suggested solutions for calculating minimum lease payments, interest rate implicit in the lease and identifying whether the lease is a finance lease. 6 Lecture Outline (Cont’d) 4. Lessee accounting & disclosure requirements for: a) Finance lease b) Operating lease c) Financial statement consequences. Comparison of journal entries finance lease versus operating lease. Industry context and relevant media article For classification identified in 4. above: measurement & recognition, disclosure, worked problem, suggested solution, industry context & relevant media articles. ACCT6001 3 7 Lecture Outline (Cont’d) 5. Lessor accounting & disclosure requirements for: a) Finance lease (i)direct financing; (ii)sales-type b) Operating lease For classification identified in 5. above: measurement & recognition, disclosure, worked problem, suggested solution. 8 1. Overview of leases a) Definition of a lease? • A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. (AASB 117 para 4) • Parties to the lease: Lessor-the owner of property that conveys the right to use the property for a specified period of time in return for a series of payments Lessee-party entering into a lease agreement with a lessor 9 1. Overview of leases b) Advantages of leasing • Lessee – 100% financing at fixed rates – protection against obsolescence – flexibility – less costly financing – taxation advantages – off-balance sheet financing ?...
View Full Document

This note was uploaded on 08/27/2011 for the course ACCT 2011 taught by Professor D during the Three '11 term at University of Sydney.

Page1 / 27

Accounting for leases 3 slides - ACCT6001 1 1 ACCT2011...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online