CH 5 - Leases Flashcards
Taxes
Capitalized or Expense
EXPENSED
Variant Amounts of Lease/ Rental Payments are recognized how
Rental/Lease payments 6 mon free calc.
EVEN INCREMENTS
Rental expense for year * 6/12 = Amount for 1st year
Saleback Lease
Amortize / Deferred Gain
Expense / Record Gain
Amortize when you retain rights after lease
When lessor retains rights
Lease Bonuses and NON refundable security deposits
amortized over the life of the lease
Depreciation Amort Formula
Time period analysis
PV of payments - Residual Value * ( time)
Ownership/ Bargain Purchase = Economic Life
75% & 90% = Lease Life
Leasehold Improvements Amortization
IFRS Amortization
Lesser of Lease Life or Economic Life
Profit Formula
1- Capital Lease
2- Sales-type / Operating Lease
1 - PV - CV
2 - FMV - CV
Capital Lease
1 - Lessee Records on Balance Sheet
2 - Valuation
3 -
1 - Asset/Liability
2 - LESSER of FMV @ inception or cost @ PV
3 - removes lease from books and only collects interest
90% Rule
PV of lease payments = 90% of lease FMV
IFRS capital lease difference
Substantially all risk and reward transferred
Saleback Lease
1 -Gain
2 -Loss
3 - Other
1 -Deferred all except minor less than 10% SP or economic life recognize immediately
2 - ALL Recognized Immediately
3 - Deferred all except minor less than 10% SP or econmic life recognize immediately
Direct Financing Lease
SP = FMV; recognized G/L immediately
Initial Directs are included in
IFRS lease @ inception
Question Phrasing
Current liabilities
amount due within a year from the date
Sales type lease is
a capital lease that has new provisions in which it becomes an operating lease
Sales-type lease COGS
CV-residual value
Types of leases tested for impairment
capital leases and operating leases
lease interest revenue earned
Lease amount collected (PV)
- CV or FMV of lease
Lessor recognizes lease receivable
1 - valuation
2 - total
1 - minimum principle payment + residual value
2 - aggregate undiscounted amount + residual value
Lessee F/S disclosure
five years of the present minimum balance
Operating lease differs from capital in that..
there is only rental payments and NO interest payments
Annuity in Advance
Annuity in Arrears
paid completely at inception
paid over the leasing period in equal increments
