ORIE 3150 October 6 2011 Slides

ORIE 3150 October 6 2011 Slides - ORIE3150 October 6 2011...

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ORIE 3150 October 6, 2011 Leases
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Review:  Cost of goods sold Beginning inventory + Purchases Ending inventory Cost of goods sold.
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Leases A lease is a contractual agreement between a lessor (owner) and a lessee (renter) that grants the right to use specific property for a period of time in return for cash payments. Leases are always contracts (legally enforceable items), but they can be one of two types.
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Operating Leases In an operating lease the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor. The lease (or rental) payments are recorded as an expense by the lessee and as revenue by the lessor. It’s just like renting something, you certainly don’t own the asset.
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Capital Leases A capital lease transfers substantially all the benefits and risks of ownership from the lessor to the lessee. The lessee is required to record an asset and the related obligation at the present value of the future lease payments.
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ORIE 3150 October 6 2011 Slides - ORIE3150 October 6 2011...

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