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handout for class 10

handout for class 10 - Handout#9 for Bus321-Intermediate...

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Handout #9 for Bus321-Intermediate Accounting II Professor: Yasheng Chen Notes for BUS321 Class 10: Accounting for Leases Learning objectives: Lease: 1. Understand the difference between lease and purchase 2. Understand and apply GAAP criteria to capitalize lease for the lessee and the lessor. 3. Prepare journal entries to record operating leases and capital leases for lessees. 4. Prepare journal entries to record operating leases, direct financing leases, and sales-type leases for lessors. 5. Identify the effect of residual values and bargain purchase options on lease accounting. Key learning points for Lease: 1. What is a lease? 2. Advantage of lease over purchase 3. Accounting principle for capitalizing leases 4. GAAP criteria for capitalizing leases for the lessee i. ii. iii. 5. (Additional) GAAP criteria for capitalizing leases for the lessor iv. v. 6. Components of minimum lease payment a. b. c. d. 7. Accounting for capital lease for the lessee a. Determine the capitalized amount i. Choose discount rate ii.
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