F5 Leases liabilities & bonds Flashcards
What conditions need to be considered a capital lease under US GAAP?
(1) The lease transfers ownership of the lease by the end of the lease term that’s fine
(2) the lease contains a written option for bargain purchase price
(3) the PV at the beginning of the lease term of the min lease payments equals or exceeds 90% of the FV lease property
(4) 75% or more of asset economic life is being committed in lease term
OWNS
Must just meet one to capitalize
Lease finance is defined as what under IFR S
I FRS to find the finance lease is a lease in which substantially all the risk and boards inherited ownership or transferred to the leasee under the IFR S, these classification depends on the substance of the transaction rather than the form of the contract
Under US GAAP what three conditions have to be met for a less sore to consider the transaction as a sales type/direct financing
LUC
Lease owns the leased property
uncertainty do not exist
Collectability of the lease payment is reasonable
Note: under US GAAP the additional criteria that must be met for lessor to classify a lease as a sales type or direct financing lease means that it is possible for leasee to classify a lease as a capital lease while the lessor classifies the same lease as an operating lease