F5 leases Flashcards
1
Q
Lessee Finance Lease Criteria (IFRS)
A
OWES FACS
- Lease transfers ownership by end of lease term
- Written bargain purchase option
- Lease term is for major part of economic life of asset even if title doesn’t transfer
- PV min lease pmts amounts to at least substantially all of the FV of the leased asset
- Gains/losses from fluctuation in FV of the residual accrues to the lessee
- Lessee has ability to continue the lease for secondary period at rent substantially below market rent
- Lessee can cancel the lease and lessor’s losses are borne by the lessee
- Leased assets are of such specialized nature that only the lessee can use them without modification.
2
Q
Lessee Capital (GAAP) / Finance (IFRS) lease criteria
A
OWNS
- Ownership transfers at end of lease
- Written option for bargain purchase
- Ninety percent (90%) of leased property FV is less than or equal to PV of lease payments
- Seventy five percent (75%) or more of asset economic life is being committed in lease term.
3
Q
Lessor Sales-Type / Direct Financing Type Criteria (GAAP)
A
LUC
- Lessee “OWNS” the leased property
- Uncertainties do not exist regarding any unreimbursable costs to be incurred by lessor
- Collectability of the lease payments is reasonably predictable
