Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Classification of Leases—Lessee

Classification of Leases—Lessor

Distinction between Sales-Type, Direct Financing, and Leveraged Leases

Accounting for Leases—Lessee

Operating leases

Capital leases

Accounting for Leases—Lessor

Operating lease

Sales-type lease

Direct financing lease

Leveraged lease

Special Situations

Change in residual value

Change in the provisions of a lease

Termination of a lease

Renewal or extension of an existing lease

Leases between related parties

Accounting for leases in a business combination

Accounting for changes in lease agreements resulting from refunding of tax-exempt debt

Sale or assignment to third parties; nonrecourse financing

Transfers of residual value (FASB ASC 860-10)

Accounting for a sublease

Sale-Leaseback Transactions

Sale-leaseback involving real estate

Leases Involving Real Estate

Leases involving land only—Lessee accounting

Lessor accounting

Leases involving land and building—Lessee accounting

Lessor accounting

Leases involving real estate and equipment

Leases involving only part of a building

Lessee accounting

Lessor accounting

Reporting of Current and Noncurrent Lease Receivable (Lessor) and Lease Obligations (Lessee)

Disclosure Requirements

Disclosure Requirements—Lessees

Disclosure Requirements—Lessors


Lease transactions have grown in popularity over the years as many organizations look for new ways to finance their ...

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