Lease+Class+2+completed+for+Sakai

Lease+Class+2+completed+for+Sakai - Leases Leasing Leasing...

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1 Leases Leases Leasing Leasing Basics Basics •The leasing environment •Conceptual nature of a lease •Current standards Classification Classification Approach – Approach – Lessors Lessors •Classification criteria •Accounting for financing and sales-type leases •Accounting for an operating lease •Initial direct cost •Lessor disclosures •Time for change Classification Classification Approach – Approach – Lessees Lessees •Classification criteria •How the lessor determines the rental payment •Accounting for a capital lease •Accounting for an operating lease •Capital and operating leases compared •Presentation and disclosure Contract-Based Contract-Based Approach Approach •Scope and definition •Recognition and measurement – lessee •Illustration •Recognition and measurement basics – lessor •New lease accounting standard IFRS / IFRS / Private Private Enterprise Enterprise GAAP GAAP Comparison Comparison •Comparison of IFRS and private enterprise GAAP •Looking ahead
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Classification Approach - Lessors Classification Approach - Lessors Type PE GAAP IFRS Operating Operating lease Operating lease Financing lease: Sales-type Sales-type lease Manufacturer or dealer lease Or Or Financing-type Direct financing lease Other finance lease 2
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3 How does the lessor determine whether the lease is a capital/finance lease? IFRS: – lessor uses same criteria as lessee PE GAAP: – lessor uses same criteria as lessee as well as additional two revenue recognition-based considerations that must be passed: 1. Credit risk associated with collection is normal 2. Remaining unreimbursable costs to lessor can be estimated If required criteria are not met, the lease is accounted for as an operating lease Classification Criteria - Lessor Classification Criteria - Lessor
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4 Both sales-type and financing-type leases are capital/finance leases The difference is whether or not there exists a manufacturer’s or dealer’s profit The sales-type lease incorporates a this profit A lease may qualify as a capital lease by the lessee and as an operating lease by the lessor Lease Classification - Lessor Lease Classification - Lessor
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5 Lessor replaces investment in asset to be leased with a lease receivable Over lease term, the receivable is collected, and interest is earned Net investment in the lease = lease payments receivable – unearned interest income Financing-Type Lease - Lessor Financing-Type Lease - Lessor
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Lease+Class+2+completed+for+Sakai - Leases Leasing Leasing...

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