F8 - NFP Accounting and Governmental Accounting: Part 1 Flashcards
M1 - Not-for-Profit Financial Reporting: Part 1
The Statenebt of Activities
Provides information about the ongoing revenues and expenses associated with a voluntary health and welfare organization similar to the income statement in commercial settings.
M1 - Not-for-Profit Financial Reporting: Part 1
What is the primary purpose and focus of the statement of activities (the approximate equivalent of an income statement in commercial settings) for a nongovernmental, not-for-profit organization
to demonstrate how the organization’s resources are used in providing various programs and services.
M1 - Not-for-Profit Financial Reporting: Part 1
Guidance included in FASB ASC 958, Financial Statements of Not-for-Profit Organizations, focuses on:
Basic information for the organization as a whole.
- The standards establish guidance for general-purpose external financial statements provided by a not-for-profit organization.
M1 - Not-for-Profit Financial Reporting: Part 1
GAAP requires that not-for-profit organizations report using the
full accrual basis of accounting
M1 - Not-for-Profit Financial Reporting: Part 1
All not-for-profit organizations, including a voluntary health-and-welfare organization (charities) must report
functional and natural classifications for expenses.
M1 - Not-for-Profit Financial Reporting: Part 1
Functional classifications
group expenses by major classes of program (aligned with mission and purpose) and support services.
M1 - Not-for-Profit Financial Reporting: Part 1
Natural classifications
group expenses by individual types that align to an entity’s chart of accounts, such as salaries, supplies, utilities, etc.
M1 - Not-for-Profit Financial Reporting: Part 1
A not-for-profit is required to produce
- statement of financial position
- statement of activities
- statement of cash flows
M1 - Not-for-Profit Financial Reporting: Part 1
Support services
typically involve items such as fundraising, administration, management, and membership development.
Salaries for fundraisers would be classified as support.
M1 - Not-for-Profit Financial Reporting: Part 1
The components of net assets of not-for-profit organizations are classified in two possible ways:
- with donor restrictions
- without donor restrictions
M1 - Not-for-Profit Financial Reporting: Part 1
A not-for-profit organization classifies balances in its statement of financial position as
- assets
- liabilities
- net assets.
M1 - Not-for-Profit Financial Reporting: Part 1
Net assets of a nongovernmental not-for-profit organization are most appropriately characterized as?
Residual interest
M1 - Not-for-Profit Financial Reporting: Part 1
Only donor imposed restrictions are recognized on the financial statement as restricted.
M1 - Not-for-Profit Financial Reporting: Part 1
The statement of activities is most similar to an income statement.
M1 - Not-for-Profit Financial Reporting: Part 1
In the statement of financial position for a not-for-profit organization, net assets are classified as..
- with or without donor restrictions.
M1 - Not-for-Profit Financial Reporting: Part 1
program service expense
is any expense that relates to the activities for which an organization is chartered
M1 - Not-for-Profit Financial Reporting: Part 1
supporting expense
any expense not classified as a program service expense.
Supporting activities generally include fundraising, administrative services, and membership development expenses.
M1 - Not-for-Profit Financial Reporting: Part 1
The three functinoal classifications for expenses incurred by a not-for-profit organization are:
- program services
- management and general costs
- fundraising and other supporting services.
M1 - Not-for-Profit Financial Reporting: Part 1
Donor-imposed restrictions that are met in the same period they are received may be recorded as
support (contribution revenue) without donor restrictions, provided that the organization discloses and consistently applies this accounting policy.
M1 - Not-for-Profit Financial Reporting: Part 1
When a donor restriction that is temporary in nature is satisfied,
a reclassification is shown on the statement of activities by decreasing net assets with donor restrictions and increasing net assets without donor restrictions.
M1 - Not-for-Profit Financial Reporting: Part 1
Expenses are reported as..
Net assets without donor restrictions
M1 - Not-for-Profit Financial Reporting: Part 1
A not-for-profit organization needs to report its expenses in the statement of activities by their..
Functional classification in the statement of activities and natural classification analyzed by function in the notes to the financial statements.
M1 - Not-for-Profit Financial Reporting: Part 1
Depreciation is included as an element of expense in a “Statement of activity” of a voluntary health and welfare organization.
M2 - Not-for-Profit Financial Reporting: Part 2
Cash flows from operating activities in a nongovernmental not-for-profit organization include
- applicable agency transactions
- cash contributions without donor restrictions
- program income
- interest income or dividend income from investments.
M2 - Not-for-Profit Financial Reporting: Part 2
Investing activities
include proceeds from the sale of works of art or purchases of works of art.
M2 - Not-for-Profit Financial Reporting: Part 2
Cash received with donor-imposed restriction limiting its use to long-term purposes (such as construction of a new building)
is displayed as a financing activity on the statement of cash flows of a not-for-profit organization.
M2 - Not-for-Profit Financial Reporting: Part 2
Investing activities in the statement of cash flows should include
proceeds from the sale of long lived assets or insurance proceeds associated with the loss of long lived assets.
- Entities that do not capitalize their permanent collections display insurance proceeds from lost, stolen or damaged items on the statement of activities in an appropriate change in net asset classification separate from revenues, expenses, gains, and losses.
M3 - Not-for-Profit Revenue Recognition
Conditions are defined as measurable performance-related barriers or other barriers.
measurable performance-related barriers or other barriers.
- These barriers are relative to either a promise to give or a donation received that are further associated with the donor’s right to acquire a return of the donation from the recipient or right to rescind the promise to give.
M3 - Not-for-Profit Revenue Recognition
Contribution revenue recognition for not-for-profit organizations
is based on the standard of satisfying conditions.
M3 - Not-for-Profit Revenue Recognition
Unconditional contributions
are recognized as revenue and then classified as either without donor restrictions or with donor restrictions.
M3 - Not-for-Profit Revenue Recognition
Conditional contributions
are accounted for as a refundable advance, and conditional promises or pledges receive no accounting treatment.
M3 - Not-for-Profit Revenue Recognition
Contributions are measured at
their fair value at the time of the gift; the securities are measured at fair value.
M3 - Not-for-Profit Revenue Recognition
An allowance for uncollectible pledges should be recorded to present
pledges receivable at their NRV in a manner consistent with commercial accounting.
Revenues, however, are recorded net of the allowance.
M3 - Not-for-Profit Revenue Recognition
A pledge received by a not-for-profit to be used in a future period would most likely..
be recorded as pledge receivable with donor restrictions and support with donor restrictions.
The restriction, which is temporary in nature, is implied by time (monies are not yet received).
M3 - Not-for-Profit Revenue Recognition
Multiyear pledges are recorded at
the net present value at the date the pledge is made.
M3 - Not-for-Profit Revenue Recognition
Good faith deposits associated with conditional promises would be recorded
as a liability titled “refundable advance”.
M3 - Not-for-Profit Revenue Recognition
Unconditional pledges that will be collected over more than one year should be reported as
pledges receivable, valued at their present value.
M3 - Not-for-Profit Revenue Recognition
Only UNCONDITIONAL pledges and receipts are recognized as revenue.
Conditional pledges would be recognized as receivables and revenue ONLY when they become unconditional (when the pledge conditinos are met (resolved)).
A conditional pledge, however, would not be recognized as receivable and revenue while identified as “conditional”.
M3 - Not-for-Profit Revenue Recognition
Donated property is recorded at
its fair value and is recognized as support.
M3 - Not-for-Profit Revenue Recognition
Split-interest agreements
represent donor contributions of trusts or other arrangements under which the not-for-profit organization receives benefits that are shared with other beneficiaries.
A charitable remainder trust is an example
M3 - Not-for-Profit Revenue Recognition
Donated services should berecorded as
contribution revenue and expense at fair value if the services meet the following criteria:
- they create or enhance a nonfinancial asset
- they require specialized skills that the provider possesses and would otherwise have been purchased by the org.
M3 - Not-for-Profit Revenue Recognition
Contributed services are, therefore recognized SOME of the time:
- when the service is Specialized
- Otherwise needed
- and Measured Easily.
M3 - Not-for-Profit Revenue Recognition
An entity need not recognize contributions of work of art, historical treasures, and similar assets if the donated items are added to collections that meet all of the following criteria:
- The item is part of a collection, which is held for public viewing, exhibition, education, or research (and not for investment or financial gain)
- The collection is cared for, preserved, and protected by the organization;
- The organization has a policy that requires any proceeds from the sale of donated items to be reinvested in other collection items or used to support the direct care of existing collections.
M3 - Not-for-Profit Revenue Recognition
Donations of medicines are included as
other operating revenue at the fair value of the medicine, because the medicine constitutes part of the ongoing major operation of the hospital.
M3 - Not-for-Profit Revenue Recognition
The three most generally used revenue classifications for a hospital are patient services revenues, other operating revenues, and nonoperating revenues.
- Other operating revenues are those generated by operations other than patient services. Revenues from educational programs would be classified as other operating revenues.
- Nonoperating revenues represent incidental earnings not related to the ongoing and central operationg of the hospitals. Gifts without donor restrictions would be classified as nonoperating revenues.
M3 - Not-for-Profit Revenue Recognition
Revenues from tuition and fees are reported at the gross amount.
- Only refunds are netted against the revenue.
- Scholarships and tuition remissions are shown separately as expenditures.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
In order fot not-for-profit organizations to be financially interrelated as defined by FASB ASC 958-605, their relationship must share both characteristics:
one organization must be able to influence the operating and financial decisions of the other and have an ongoing economic interest in the net assets of the other.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
Donated shares of stock are measured at their fair value on the date of donation.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
All debt securities and those equity securities that have readily determinable fair values are measured at
fair value in the statement of financial position.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
Gains and losses on investments are reported in
Statement of activities.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
Investment income (dividends and interest) is reported in
the period earned as an increase in net assets.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
In the case of non-profit organizations such as churches, marketable securities are reported
at market value as of the balance sheet date.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
Not-for-profit organization investments are displayed at their fair value at year-end.
The best most reliable measure of fair value is quoted market prices (assuming they are available).
All debt securities and those equity securities that have readily determinable fair values are measured at fair value in the statement of financial position.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
Gains and losses should be reported in the statement of activities as increases or decreases in net assets without donor restrictions unless otherwise stipulated by donor or by law.
In the event restrictions are associated with earnings on investments restricted in perpetuity, losses are absorbed by the endowment.
M4 - Not-for-Profit Transfers of Assets and Other Accounting Issues
A nongovernmental not-for-profit charitable organization is accounted for using the accrual method, so normal accrual accounting is used.
M5 - Governmental Accounting Overview
The primary authoritative body for determining the measurement focus and basis of accounting standards for governmental fund operating statements is
The Governmental Accounting Standards Board (GASB)
M5 - Governmental Accounting Overview
External financial reports are used by three primary user groups including
- citizens
- legislative/oversight groups
- investors/creditors
Advocate groups within the state are logically associated with citizens, citizen groups, etc.
M5 - Governmental Accounting Overview
The characteristic of service efforts and accomplishments most difficult to report for a governmental entity is?
Relevance
M5 - Governmental Accounting Overview
A balanced budget demonstrates interperiod equity.
M5 - Governmental Accounting Overview
Fund accounting
enables service and mission-driven organizations to easily monitor compliance with spending purpose (legal restrictions), spending limits (budget and financial control), and other fiscal accountability objectives.
M5 - Governmental Accounting Overview
The fund structure of a governmental entity and the number of funds used is a matter of judgement.
A city accountant would set up the number of funds consistent with the legal requirements of the government to properly segregate funds and to ensure sound financial administration to properly safeguard assets.
M5 - Governmental Accounting Overview
Separate fund financial statements should be presented..
for governmental and proprietary funds to report additional and detailed information about the primary government.
M5 - Governmental Accounting Overview
A fund
is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein.
M5 - Governmental Accounting Overview
Fund resources
are segregated for the purpose of carrying out specific activities (e.g., water and sewer operations) or attaining certain objectives (e.g., providing drinking water and wastewater management services to customers).
M6 - Governmental Fund Structure and Fund Accounting
The measurement focus of governmental fund accounting is?
Current financial resources
Governmental funds (GRSPP)
M6 - Governmental Fund Structure and Fund Accounting
Measurement focus for a governmental fund contemplates measurement of the flow of current financial resources and resulting financial position.
A fund’s measurement focus identifies what transactions should be recorded and how they should be reported.
- For governmental funds, the statement of revenues and expenditures should report resources received and consumed during the current period (current financial resources focus).
- The balance sheet shows available resources and current obligations (financial position focus).
M6 - Governmental Fund Structure and Fund Accounting
Income determination is a focus of the
proprietary and fiduciary funds.
M6 - Governmental Fund Structure and Fund Accounting
The measurement focus prescribed by GASB standards for all governmental funds is
the “flow of current financial resources” focus which measures sources, uses, and balances of current financial resources.
M6 - Governmental Fund Structure and Fund Accounting
Permanent funds
are used to report resources that are legally restricted to the extent income, and not principal, may be used for purposes supporting the reporting government’s programs for the benefit of the public.
M6 - Governmental Fund Structure and Fund Accounting
GRaSPP
- General Fund
- Special Revenue Fund
- Debt Service Fund
- Capital Projects Funds
- Permanent Fund
M6 - Governmental Fund Structure and Fund Accounting
Special Revenue and Permanent Funds account for restricted governmental fund resources.
- Special Revenue funds are expendable (may be entirely used up).
- Permanent funds are NONexpendable (legally restricted to the extent that income and not principal may be used for the restricted purpose.
M6 - Governmental Fund Structure and Fund Accounting
Governmental Funds
accounted for using the:
- Modified accrual basis of accounting
- Current financial resources measurement focus
M6 - Governmental Fund Structure and Fund Accounting
Proprietary Funds
(treat like a customer / not a citizen)
account for business-type activities, and their accounting is similar to commercial accounting. Proprietary funds should be accounted for using the:
- Full accrual basis of accounting
- Economic resources measurement focus
M6 - Governmental Fund Structure and Fund Accounting
Proprietary Fund Types
- Internal Service Funds
- Enterprise Funds
(SE)
M6 - Governmental Fund Structure and Fund Accounting
Enterprise fund
should account for fixed assets in a manner similar to a “for profit” organization.
Its accounting is similar to accrual basis commercial accounting.
M6 - Governmental Fund Structure and Fund Accounting
Special revenue fund
is used to account for revenues and specific taxes to finance particular activities of government.
M6 - Governmental Fund Structure and Fund Accounting
Capital projects fund
is used to account for the acquisition or construction of major capital assets other than those financed by an enterprise fund.
M6 - Governmental Fund Structure and Fund Accounting
Expenditures are generally recorded when
the related fund liability is incurred but are limited to the amounts payable from available expendable resources.
No non-current liabilities are reported.
M6 - Governmental Fund Structure and Fund Accounting
Under the “modified accrual basis” of accounting for a governmental unit,
revenues should be recognized for the accounting period in which they “become available and measurable”.
M6 - Governmental Fund Structure and Fund Accounting
Property tax revenues that are measurable but not available at year end are recorded
as deferred inflows of resources in governmental fund presentations and not recognized as revenues consistent with the modified accrual basis of accounting
M6 - Governmental Fund Structure and Fund Accounting
Government-wide financial statements are presented on the full accrual basis of accounting and would recognize property tax revenue regardless of availability.
Worksheet entries used to prepare the government-wide financial statements would eliminate the deferred inflow and recognize revenue.
M6 - Governmental Fund Structure and Fund Accounting
The general fund
uses the modified accrual basis of accounting which recognizes revenues in the accounting period in which they BECOME AVAILABLE.
M6 - Governmental Fund Structure and Fund Accounting
The enterprise fund
uses the full accrual, which recognizes revenues in the accounting period in which the are EARNED.
M7 - Budgetary and Activity Accounting
Revenues include
- property taxes
- licenses
- intergovernmental revenues
Transfers would be considered estimated other financing sources.
M7 - Budgetary and Activity Accounting
Budgetary
is used to control spending
control expenditures
M7 - Budgetary and Activity Accounting
Activity
emphasizes the flow of current financial resources and has an annual budgetary focus
M7 - Budgetary and Activity Accounting
Encumbrance
is used to record purchase orders and is designed to monitor spending for increased budgetary control.
M7 - Budgetary and Activity Accounting
A budgeted excess of revenues over appropriations should be credited to budgetary control
credited to budgetary control
M7 - Budgetary and Activity Accounting
A debit balance in budgetary control accounts would indicate that appropriations are in excess of budgeted revenues.
Budgetary accounts have natural balances that are opposite of actual accounts.
M7 - Budgetary and Activity Accounting
Unassigned fund balance represents the amount of current resources carried forward into the following year that will be available for appropriations.
Assuming there are no encumbrances at year end and expenditures were less than appropriations, any commitment or assignment of fund balance for encumbrances would be released and unassigned fund balance would increase.
M7 - Budgetary and Activity Accounting
Revenue from property taxes is recognized when
the revenue is available and measurable
M7 - Budgetary and Activity Accounting
Derived (non-exchange) tax revenues
represent taxes imposed on or derived from exchange transactions such as commercial sales (sales taxes).
M7 - Budgetary and Activity Accounting
Imposed non-exchange revenues
include property taxes.
M7 - Budgetary and Activity Accounting
What is the major difference between an exchange transaction and a non-exchange transaction for governmental units?
The relationship between the amount of value given and received.
M7 - Budgetary and Activity Accounting
exchange transaction
is a reciprocal transfer in which each party receives and sacrifices something of approximately equal value.
With an exchange transaction, there is a bargained value in the transaction
M7 - Budgetary and Activity Accounting
non-exchange transaction
involves giving/receiving value without receiving/giving equal value in return.
with a non-exchange transaction there is NO bargained value or arms lenght transaction.
M7 - Budgetary and Activity Accounting
Imposed tax revenues
are recorded (accrued) as revenue when levied, subject to the measurable and available criteria.
M7 - Budgetary and Activity Accounting
Derived (non-exchange) tax revenues
represent taxes imposed on or derived from exchange transactions such as commercial sales (sales taxes), taxpayer income (income taxes), etc.
M7 - Budgetary and Activity Accounting
Imposed non-exchange revenues
represent taxes imposed on non-exchange transactions (fines) or wealth (property taxes).
M7 - Budgetary and Activity Accounting
The revenues control account of a governmental unit is increased when:
Property taxes are recorded.
Eaxmple JE:
DR. Property taxes receivable
CR. Allowance for uncollectible property taxes
CR. Revenues
M7 - Budgetary and Activity Accounting
Contingency requirements
are unique to voluntary non-exchange transactions.
M7 - Budgetary and Activity Accounting
Imposed non-exchange transactions
are recognized as revenue when they meet both time and modified accrual requirements.
M7 - Budgetary and Activity Accounting
Time requirements peratin to the recognition of revenues in the period in which use of resources may begin.
Generally, this means that revenues are first eligible for recognition in the period for which the revenues are budgeted.
M7 - Budgetary and Activity Accounting
Grant revenues
are recognized as revenues in the year in which the monies are used.
M7 - Budgetary and Activity Accounting
The general fund records the salaries as Expenditures with a credit to salaries payable.
M7 - Budgetary and Activity Accounting
Types of Non-exchange Revenues
- Derived Tax Revenues - represent taxes imposed on or derived from exchange transactions, such as commercial sales (sales taxes), taxpayer income (income taxes), etc.
- Imposed Non-exchange reveenues - represent taxes imposed on non-exchange transactions (fines) or wealth ( property taxes).
M7 - Budgetary and Activity Accounting
Revenue recognition in governmental funds
is always subject to modified accrual standards.
Recognized revenue will be adjusted to the amount available through the allowance account or deferred inflows of resources account even through the receivable is recognized.
M7 - Budgetary and Activity Accounting
Receivables recognition in governmental funds
are recognized if the government has an enforceable claim (a tax levy on property).
M7 - Budgetary and Activity Accounting
Government-Mandated Non-exchange Transactions
represent instances in which a higher level of government (a state) provides funds and mandates certain activities by another level of government (a county), such as environmental cleanup, etc.
M7 - Budgetary and Activity Accounting
Voluntary Non-exchange Transactions
represent instances in which the government receives resources and does not provide equal value (grant agreements).
M7 - Budgetary and Activity Accounting
Time requirements
Applicable to all Non-exchange Revenues
Revenues are first recognized in the period in which resources must be used or when use may begin.
M7 - Budgetary and Activity Accounting
Eligibility Requirements
Applicable to Government-Mandated and Voluntary Non-exchange Transactions
- Time requirements - revenues are first recognized in the period in which resources must be used or when use may begin, with emphasis on the time limit associated with the revenue.
- Required Characteristics of Recipients - The resource provider specifies certain characteristics for the recipient.
- Reimbursements - Allowable expenditures must be incurred before revenue may be recognized.
- Contingencies (Voluntary NET only) - actions must be taken before revenue is earned.
M7 - Budgetary and Activity Accounting
Expenditures
are decreases in net financial resources other than through interfund transfers.
M7 - Budgetary and Activity Accounting
General fixed assets,
such as land, buildings, and equipment, purchased with general fund resources should be recorded as expenditures in the general fund.
M7 - Budgetary and Activity Accounting
Capital purchases, debt service payments, and operating expenditures
are considered spending of funds and are treated as current year expenditures.
M7 - Budgetary and Activity Accounting
Acquisition of a new police car in a city’s general fund would be displayed as
a capital outlay expenditure in its governmental fund statement of revenues, expenditures, and changes in fund balances.
M7 - Budgetary and Activity Accounting
Expenditures of a governmental unit extending over more than one accounting period:
May be allocated between or among accounting periods or may be accounted for as expenditures of the period of acquisition.
M7 - Budgetary and Activity Accounting
The primary difference between the purchase method of accounting for inventory and the consumption method of accounting for inventory is that the purchase method:
Initially records additinos to inventory as expenditures.
M7 - Budgetary and Activity Accounting
purchase method
initially records additions to inventory as an expenditure and then establishes inventory balances and related non-spendable fund balance amounts based on physical counts and valuations at year end.
M7 - Budgetary and Activity Accounting
Classification of Governmental Expenditures:
- Function or Program - provides information on the overall purpose of the expenditures.
- Organizational unit - corresponds to the organizational structure of the governmental entity.
- Activity - can be an event, a task, or a unit of work with a specific purpose.
- Character - refers to determining the basisof the fiscal period the expenditures are presumed to benefit.
- Object Classes - (chart of accounts) classifies the expenditure according to the type of items purchased or services obtained.
M7 - Budgetary and Activity Accounting
What is an example of an Object Classification
- Wages and salaries
This is the most specific classification in the hierarchy and represents the chart of accounts title.
M7 - Budgetary and Activity Accounting
Fixed assets are not expected to contribute to the generation of revenue and are therefore treated as an expenditure (capital outlay).
This will serve to reduce the excess of revenue over expenditures.
M7 - Budgetary and Activity Accounting
It is inappropriate to record depreciation expense in a
Capital projects fund
M7 - Budgetary and Activity Accounting
The expenditures control account should be
debited in the general fund at the inception of the lease for the principal portion of the lease.
M7 - Budgetary and Activity Accounting
A contract that transfers ownership
is a contract that conveys ownership of the underlying asset to the lessee in a financed purchase.
M7 - Budgetary and Activity Accounting
Governmental funds account for an acquisition of long-lived assets
using long-term financing as other financing sources.
M7 - Budgetary and Activity Accounting
When a lease of a governmental unit represents the acquisition of a general fixed asset through a contract that transfers ownership, the acquisition should be reflected in fund financial statements as:
- Both an expenditure and an other financing source.
DR. Expenditure - Capital outlay
CR. Other financing source - Lease
M7 - Budgetary and Activity Accounting
Equipment acquired through “contracts that transfer ownership” should be accounted for as
equipment
M7 - Budgetary and Activity Accounting
JE to record an equipment lease made one year after acquisition by the internal service fund:
DR. Lease liability (principal)
DR. Expenses control (interest)
CR. Cash
M7 - Budgetary and Activity Accounting
In which case would a municipality record a lease using a right-of-use asset account?
A proprietary fund entering into an agreement as a lessee in an agreement properly accounted for as a lease other than a short-term lease and contract that transfers ownership.
M7 - Budgetary and Activity Accounting
Leases other than short-term leases and contracts that transfer ownership are recognized
as a right-of-use asset with related debt for net present value of lease payments.
