Session 21 Lease 1 - Class21:Leases HyeSunChang ACCY303...

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Class 21: Leases Hye Sun Chang ACCY 303  
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Review Review Trading  Securities  Available-for- sale Securities Held-to- maturity  Securities Valuation Unrealized  holding G/L Gain on sale of  investments  1. Small Investment Fair value Fair value Amortized cost NI OCI N/A Selling price- Carrying amount  of investment Selling price- Initial cost Selling price- Recent FMV
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Review Review 2. Equity Method/Fair Value Option (SFAS 159) Equity Method Fair Value Option (SFAS 159) Alternative I Alternative II Initial acquisition NI (pro rate share of  investee’s NI) Dividend (received  from the investee) Amortization B/S balance Fair Value  Adjustment Dr. Investment     Cr. Cash Dr. Investment     Cr. Cash Dr. Investment      Cr. Cash Dr. Investment     Cr. Investment Income Dr. Cash     Cr. Investment Dr. Investment     Cr. Investment Income Dr. Cash     Cr. Investment Dr. Investment Income     Cr. Investment  Dr. Investment Income     Cr. Investment  No entry No entry Dr. Cash    Cr. Dividend Revenue N/A Dr. Unrealized G/L     Cr. Investment  Dr. Unrealized G/L     Cr. Investment 
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Outline Outline 1. Explain the criteria and conditions used to  classify leases. 2. Discuss the accounting treatment of operating  and capital leases for the lessee.
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Leases Leases A lease is an agreement where  the  lessor  (asset owner)  conveys the right to use  property, plant, or equipment,  usually for a stated period of  time, to the  lessee  (asset user). Leases can have very short or  long-term structures. Some leases are just short- term rental contracts. Alternatively, other leases may  effectively transfer ownership  from the lessor to the lessee. Lessor Lessee Asset Periodic Payments
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Economic Factors in Leasing  Economic Factors in Leasing  Transactions Transactions • What are the main considerations for both parties  in a leasing transaction?
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Session 21 Lease 1 - Class21:Leases HyeSunChang ACCY303...

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