Under sales-type leases and direct-financing leases, gains and interest revenue are recognized using the interest method. The difference between the PV of lease payments and book value of leased asset is your profit. Amortized that over the life of the lease (or life of the asset, whichever is shorter) by multiplying the interest rate by monthly lease payment and applying that to interest, take the remainder and apply that to the carrying value of the lease, like it's no big deal.
Knowing the difference between Operating and Capital leases seems like an important distinction the AICPA wants to test. There are four criteria that you should know that make a lease "Capital". I'm dying to provide this link to a Roger CPA video I found on youtube. I wish there were more, but that's all they posted.
Showing posts with label leases. Show all posts
Showing posts with label leases. Show all posts
Tuesday, September 14, 2010
Leases and the SFAS's that cover it
Just for reference here are the key SFAS's that cover leases:
SFAS 13 - Accounting for Leases (Nov 1976)
SFAS 23 - Inception of the Lease
SFAS 27 - Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing Leases
SFAS 28 - Accounting for Sales with Leasebacks
SFAS 29 - Determining Contingent Rentals
SFAS 91 - Nonrefundable Fees & Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases
SFAS 98 - Accounting for Leases
SFAS 145 - Rescission of FASB Statements 4, 44, and 64 Ammendment of FASB No. 13, and Technical Corrections (Apr 2002)
SFAS 146 - Accounting for Costs Associated with Exit or Disposal Activities
I included the issue dates for SFAS 13 and SFAS 145 above because they were the only ones Wiley did that for. I'm about to start the module, and I guess I'll find out soon why, or if, that's important.
SFAS 13 - Accounting for Leases (Nov 1976)
SFAS 23 - Inception of the Lease
SFAS 27 - Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing Leases
SFAS 28 - Accounting for Sales with Leasebacks
SFAS 29 - Determining Contingent Rentals
SFAS 91 - Nonrefundable Fees & Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases
SFAS 98 - Accounting for Leases
SFAS 145 - Rescission of FASB Statements 4, 44, and 64 Ammendment of FASB No. 13, and Technical Corrections (Apr 2002)
SFAS 146 - Accounting for Costs Associated with Exit or Disposal Activities
I included the issue dates for SFAS 13 and SFAS 145 above because they were the only ones Wiley did that for. I'm about to start the module, and I guess I'll find out soon why, or if, that's important.