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Sewa Guna (Leasing)

Nurzi Sebrina

Dasar-dasar Leasing
lease perjanjian kontraktual antara lessor dan lessee yang memberikan hak pada lessee untuk menggunakan properti tertentu, yang dimiliki oleh lessor, selama periode waktu tertentu dengan membayar sejumlah uang (sewa) yang sudah ditentukan, yang umumnya secara periodik.

Largest group of leased equipment involves: Information technology, Transportation (trucks, aircraft, rail), Construction and Agriculture.
LO 1 Explain the nature, economic substance, and advantages of lease transactions.

Dasar-Dasar Leasing
Keunggulan Leasing (Advantages of Leasing)
1.

Pembiayaan 100% dengan suku bunga tetap.

2. Proteksi terhadap keusangan. 3. Flexibility.

4. Pembiayaan lebih murah.


5. Tax Advantages (penghematan pajak). 6. Pembiayaan di luar neraca (Off-Balance-

Sheet Financing).

LO 1 Explain the nature, economic substance, and advantages of lease transactions.

Defenisi Sewa (PSAK 30)


Sewa adalah suatu perjanjian dimana lessor memberikan hak kepada lessee untuk menggunakan suatu aset selama periode yang disepakati

Awal Sewa vs Awal Masa Sewa


Awal Sewa (inception of the lease) tanggal yg lebih awal antara perjanjian sewa dan tgl pihakpihak menyatakan komitmen thd ketentuanketentuan pokok sewa. Pada tgl ini:
Sewa diklasifikasikan sbg sewa operasi atau pembiayaan Untuk sewa pembiayaan, jumlah yg diakui pd awal masa sewa ditentukan

Awal masa sewa(commencement of the lease term) tanggal saat lessee mulai berhak untuk menggunakan aset sewaan.
Tanggal ini merupakan tgl pertama kali sewa diakui(yaitu pengakuan aset, kewajiban, penghasilan atau beban sewa)

Klasifikasi Sewa- Revisi 2007


Lease = sewa
1. Sewa Pembiayaan(finance lease)sewa yang mengalihkan scr substansial seluruh resiko dan manfaat yg terkait dgn kepemilikan suatu aset. Hak milik pd akhirnya dpt dialihkan, dpt juga tidak dialihkan(par 8) 2. Sewa Operasi(operating lease)sewa yang tidak mengalihkan scr substansial seluruh resiko dan manfaat yg terkait dgn kepemilikan aset (Par.8)

Klasifikasi sbg sewa pembiayaan atau sewa operasi didasarkan pada substansi transaksi dan bukan pada bentuk kontraknya (substance over form)

The Leasing Environment


Operating Lease
Rent expense Cash xxx xxx

Substance versus Form

Although technically legal title may not pass, the benefits from the use of the property do.

Capital Lease
Leased equipment Lease liability xxx xxx

LO 1 Explain the nature, economic substance, and advantages of lease transactions.

Indikator-Indikator Klasifikasi
1. Sewa mengalihkan kepemilikan aset kpd lessee pd akhir masa sewa 2. Lessee mempunyai opsi untuk membeli aset pada harga yg cukup rendah dibanding dg nilai wajar pd tgl opsi mulai dpt dilakukan, shg pd awal sewa dpt dipastikan bahwa opsi memang akan dilaksanakan 3. Masa sewa adl untuk sebagian besar umur ekonomis aset meskipun hak milik tidak dialihkan 4. Pada awal sewa, nilai kini dr jumlah pembayaran sewa minimum scr substansial mendekati nilai wajar aset sewaan 5. Aset sewaan bersifat khusus dimana hanya lessee yang dapat menggunakannya tanpa perlu modifikasi scr substansial

Indikator tambahan (Par. 11)


Jika lessee membatalkan sewa, maka rugi lessor yg terkait dg pembatalan ditanggung oleh lessee. Laba/rugi dari fluktuasi nilai wajar residu dibebankan kpd lessee Lessee memiliki kemampuan untuk melanjutkan sewa untuk periode kedua dengan nilai rental yang secara substansial lebih rendah dari nilai rental pasar

Accounting by the Lessee


Jika lesse mengkapitalisasi leasing, maka lesse akan

mencatat aset dan kewajiban yang umumnya sama dengan nilai sekarang pembayaran sewa.
Mencatat depresiasi aset tetap yang dileasing.

Memperlakukan pembayaran sewa, terdiri dari pembayaran pokok pinjaman dan bunga
Journal Entries for Capitalized Lease

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

For a Finance lease, the IASB has identified four criteria.


1. Lease transfers ownership of the property to the lessee. 2. Lease contains a bargain-purchase option.

3. Lease term is for major part of the economic life of the


asset. 4. Present value of the minimum lease payments amounts to substantially all of the fair value of the leased asset.
One or more must be met for finance lease accounting.

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Lease Agreement

Leases that DO NOT meet any of the four criteria are accounted for as Operating Leases.
Illustration 21-4

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Kriteria klasifikasi Sewa guna (FASB/SAK Lama)


Untuk mencatat leasing sebagai capital lease, leasing harus tidak dapat dibatalkan (noncancelable).
Satu atau lebih dari 4 kriteria harus terpenuhi (Kriteria Kapitalisasi (lessee)):
1. Pemindahan pemilikan properti pada lessee. 2. Memiliki opsi untuk membeli dengan harga khusus. 3. Jangka waktu leasing 75% dari estimasi umur

ekonomis aset yang leasing.

4. Nilai sekarang dari pembayaran leasing minimum

(tidak termasuk biaya executory) 90% dari nilai wajar properti yang di leasingy.

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Sewa dalam lap Keuangan Lessee


Sewa Pembiayaan
Aset dan kewajiban diakui sebesar nilai wajar aset sewaan atau sebesar nilai kini dari pembayaran sewa minimum, jika nilai kini lebih rendah dari nilai war, Tingkat diskonto yg digunakan adalah tingkat suku bunga implisit dlm sewa, jika ditentukan scr praktis; jika tidak, digunakan tingkat suku bunga pinjaman inkremental lessee. Biaya langsung awal yg dikeluarkan lessee ditambahkan ke dalam jumlah yang diakui sbg aset, termasuk biaya sehubungan dg aktivitas sewa tertentu, spt negosiasi dan pemastian pelaksanaan sewa

Accounting by the Lessee


Pengujian Pemulihan Investasi (Pengujian 90%)
Minimum lease payments:

Minimum rental payment Guaranteed residual value Penalty for failure to renew Bargain purchase option Insurance Maintenance Taxes
Exclude from PV of Minimum Lease Payment calculation

Executory Costs:

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


Aset dan kewajiban yang diperlakukan secara berbeda
Aset dan kewajiban dicatat, pada nilai terendah dari:

1. Nilai sekarang pembayaran leasing minimum (kecuali biaya eksekutori) atau,


2. Nilai pasar wajar aset yang dilease pada awal leasing.
LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


Aset dan kewajiban yang diperlakukan secara berbeda
Depreciation Period Jika leasing mengalihkan pemilikan, depresiasi

aset selama umur ekonomis aset.


Jika leasing tidak mengalihkan pemilikan, depresiasi selama masa leasing.

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


E21-1: On January 1, 2011, Adams Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Adams to make annual payments of $9,968 at the beginning of each year, starting January 1, 2011. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. Adams uses the straight-line method of depreciation for all of its plant assets. Adamss incremental borrowing rate is 10%, and the lessors implicit rate is unknown (impracticable to determine). Instructions (a) What type of lease is this? Explain. (b) Compute the present value of the minimum lease payments. (c) Prepare all necessary journal entries for Adams for this lease through January 1, 2012.
LO 2

Accounting by the Lessee


E21-1: What type of lease is this? Explain. Capitalization Criteria:
1. 2. 3.

Finance Lease, #3

Transfer of ownership Bargain purchase option Lease term for major part of economic life of leased property Present value of minimum lease payments substantially all of FMV of property

NO NO
Lease term Economic life 5 yrs. 6 yrs. 83.3%

YES

4.

FMV of leased property is unknown.

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


E21-1: Compute present value of the minimum lease payments. Payment Present value factor (i=10%,n=5) PV of minimum lease payments 1/1/11 Journal Entries: Leased Machine Under Finance Leases Lease Liability Lease Liability 9,968 41,565 41,565 $ 9,968 4.16986 $41,565

Cash

9,968
LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


E21-1: Lease Amortization Schedule
10% Interest Expense

Date 1/1/11 1/1/11 12/31/11 12/31/12 12/31/13 12/31/14

Lease Payment

Reduction in Liability $

Lease Liability 41,565 31,597 24,789 17,300 9,062 0

9,968 9,968 9,968 9,968 9,968 3,160 2,479 1,730 906

9,968 6,808 7,489 8,238 9,062

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


E21-1: Journal entries for Adams through Jan. 1, 2012.

12/31/11
Depreciation Expense Accumulated Depreciation
($41,565 5 = $8,313)

8,313 8,313

Interest Expense Interest Payable


($41,565 $9,968) X .10]

3,160 3,160

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


E21-1: Journal entries for Adams through Jan. 1, 2012.

1/1/12
Lease Liability Interest Payable 6,808 3,160

Cash

9,968

LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.

Accounting by the Lessee


Operating Method
The lessee assigns rent to the periods benefiting from the use of
the asset and ignores, in the accounting, any commitments to make future payments. Illustration: Assume Adams accounts for it as an operating lease. Adams records this payment on January 1, 2011, as follows. Rent Expense Cash 9,968 9,968

LO 3 Contrast the operating and capitalization methods of recording leases.

Accounting by the Lessee


E21-1: Comparison of Capital Lease with Operating Lease
E21-1 Finance Lease Depreciation Interest Expense Expense Total $ 8,313 8,313 8,313 8,313 8,313 $ 41,565 $ 8,275 $ $ 3,160 2,479 1,730 906 $ 11,473 10,792 10,043 9,219 8,313 49,840 $ Operating Lease Expense $ 9,968 9,968 9,968 9,968 9,968 49,840

Date 2011 2012 2013 2014 2015

Diff. $ 1,505 824 75 (749) (1,655) 0

LO 3 Contrast the operating and capitalization methods of recording leases.

Accounting by the Lessor


Benefits (keunggulan) to the Lessor
1.

Interest Revenue.

2. Tax Incentives.
3. High Residual Value.

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Economics of Leasing
A lessor determines the amount of the rental, based on the rate of return needed to justify leasing the asset.

If a residual value is involved (whether guaranteed or not), the company would not have to recover as much from the lease payments

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


E21-10 (Computation of Rental) Morgan Leasing Company signs an agreement on January 1, 2007, to lease equipment to Cole Company. The following information relates to this agreement.
1. 2. 3. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $245,000. The fair value of the asset at January 1, 2007, is $245,000. The asset will revert to the lessor at the end of the lease term at which time the asset is expected to have a residual value of $43,622, none of which is guaranteed. The agreement requires annual rental payments, beg. Jan. 1, 2007. Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor.
LO 4 Identify the classifications of leases for the lessor.

4. 5.

Accounting by the Lessor


E21-10 (Computation of Rental) Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required.
Residual value PV of single sum (i=10%, n=6) PV of residual value Fair market value of leased equipment Present value of residual value Amount to be recovered through lease payment PV factor of annunity due (i=10%, n=6) Annual payment required
x

$ $

43,622 0.56447 24,623

$ 245,000 (24,623) 220,377 4.79079 $ 46,000

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Classification of Leases by the Lessor
a. Operating leases. b. Direct-financing leases. c. Sales-type leases.

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Classification of Leases by the Lessor
Illustration 21-11

A sales-type lease involves a manufacturers or dealers profit, and a direct-financing lease does not.
LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Classification of Leases by the Lessor
Illustration 21-12

A lessor may classify a lease as an operating lease but the lessee may classify the same lease as a capital lease.
LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Direct-Financing Method (Lessor)
In substance the financing of an asset purchase by the lessee.

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10 Prepare an amortization schedule that would be suitable for the lessor.
Lease Payment $ 46,000 46,000 46,000 46,000 46,000 46,000 43,622 19,900 17,290 14,419 11,261 7,787 3,965* 10% Interest Revenue Recovery of Receivable $ 46,000 26,100 28,710 31,581 34,739 38,213 39,657 Lease Receivable $ 245,000 199,000 172,900 144,190 112,609 77,870 39,657 0

Date 1/1/07 1/1/07 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12

* rounding LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10 Prepare all of the journal entries for the lessor for 2007 and 2008.
Journal entry 1/1/07 1/1/07 12/31/07 Lease receivable Equipment Cash Lease receivable Interest receivable Interest revenue 245,000 245,000 46,000 46,000 19,900 19,900

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10 Prepare all of the journal entries for the lessor for 2007 and 2008.
Journal entry 1/1/08 Cash Lease receivable Interest receivable Interest receivable Interest revenue 46,000 26,100 19,900 17,290 17,290

12/31/08

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


Operating Method (Lessor)
Records each rental receipt as rental revenue. Depreciates the leased asset in the normal manner.

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10 (Computation of Rental): Fieval Leasing Company signs an agreement on January 1, 2010, to lease equipment to Reid Company. The following information relates to this agreement. 1. 2. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost and fair value of the asset at January 1, 2010, is 343,000.

3.

The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of 61,071, none of which is guaranteed.
Reid Company assumes direct responsibility for all executory costs.

4.

5.

The agreement requires equal annual rental payments, beginning on January 1, 2010.

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


E21-10 (Computation of Rental): Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required.
Residual value PV of single sum (i=10%, n=6) PV of residual value Fair market value of leased equipment Present value of residual value Amount to be recovered through lease payment PV factor of annunity due (i=10%, n=6) Annual payment required
x

61,071 0.56447 34,473 343,000 (34,473) 308,527 4.79079

64,400

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Classification of Leases by the Lessor
a. Operating leases. b. Direct-financing leases. c. Sales-type leases.

LO 4 Identify the classifications of leases for the lessor.

Accounting by the Lessor


Classification of Leases by the Lessor
Illustration 21-10

LO

Accounting by the Lessor


Direct-Financing Method (Lessor)
In substance the financing of an asset purchase by the lessee. Lessor records:

A lease receivable instead of a leased asset. Receivable is the present value of the minimum lease payments plus the present value of the unguaranteed residual value.

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10: Amortization schedule that would be suitable for the lessor.

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10: Prepare all of the journal entries for the lessor for 2010 and 2011.
1/1/10 Lease Receivable Equipment 1/1/10 Cash Lease Receivable 64,400 64,400 343,000 343,000

12/31/10

Interest Receivable
Interest Revenue

27,860
27,860

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


E21-10: Prepare all of the journal entries for the lessor for 2010 and 2011.
1/1/11 Cash Lease Receivable Interest Receivable 12/31/11 Interest Receivable Interest Revenue 24,206 24,206 64,400 36,540 27,860

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


Operating Method (Lessor)

Records each rental receipt as rental revenue.


Depreciates leased asset in the normal manner.

LO 5 Describe the lessors accounting for direct-financing leases.

Accounting by the Lessor


Illustration: Assume Fieval accounts for the lease as an operating lease. It records the cash rental receipt as follows: Cash Rental Revenue Depreciation is recorded as follows: 64,400 64,400

Depreciation Expense
Accumulated Depreciation
($343,000 61,067) / 6 years = 57,167

46,989
46,989

LO 5 Describe the lessors accounting for direct-financing leases.

Special Accounting Problems


1. Residual values.

2. Sales-type leases (lessor).


3. Bargain purchase options. 4. Initial direct costs. 5. Current versus noncurrent classification. 6. Disclosure.

LO 6 Identify special features of lease arrangements that cause unique accounting problems.

Special Accounting Problems


Residual Values
Lessee Accounting for Residual Value The accounting consequence is that the minimum lease payments, include the guaranteed residual value but excludes the unguaranteed residual value. Illustration: See previous E21-1 (Capital Lease with Unguaranteed Residual Value)
LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE and LESSOR Computations and Entries) On Jan. 1, 2007, Velde Company (lessee entered into a four-year, noncancellable contact to lease a computer for Exceptional Computer Company (lessor). Annual rentals of $16,228 are to be paid each Jan. 1. The cost of the computer to Exceptional Computer Company was $60,000 and has an estimated useful life of four years and a $5,000 residual value. Velde has guaranteed the lessor a residual value of $5,000. Velde has an incremental borrowing rate of 12% but has knowledge that Exceptional computer Company used a rate of 10% in setting annual rentals. Collection of the rentals is reasonably predictable and there are no important uncertainties regarding future unreimbursable costs to be incurred by the lessor.
LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE) What is the present value of the minimum lease payments?
Payment PV of annunity due (i=10%, n=4) PV of residual value Residual value PV of single sum (i=10%, n=4) PV of residual value Total Present Value $ $ 16,228 3.48685 56,585 5,000 0.68301 3,415 60,000

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE) What type of lease is this? Explain.

Capitalization Criteria:
1. Transfer of ownership
2. Bargain purchase option 3. Lease term => 75% of

Capital Lease, #3

NO NO
Lease term Economic life 4 yrs. 4 yrs. 100%

economic life of leased property


lease payments => 90% of FMV of property

YES

4. Present value of minimum

FMV of leased property is unknown.

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE) Prepare an amortization schedule that would be suitable for the Velde.
Lease Payment $ 16,228 16,228 16,228 16,228 5,000 4,377 3,192 1,889 454 * 10% Interest Expense Reduction of Liability $ $ 16,228 11,851 13,036 14,339 4,546 Lease Liability 60,000 43,772 31,921 18,885 4,546 0

Date 1/1/07 1/1/07 12/31/07 12/31/08 12/31/09 12/31/10


* rounding

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE) Prepare all of the journal entries for the Velde for 2007 and 2008.
Journal entry 1/1/07 1/1/07 12/31/07 12/31/07 Lease computer Lease liability Lease liability Cash Interest expense Interest payable 60,000 60,000 16,228 16,228 4,377 4,377 13,750

($60,000 5,000) / 4 = $13,750

Depreciation expense 13,750 Accumulated Depreciation

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSEE) Prepare all of the journal entries for the Velde for 2007 and 2008.
Journal entry 1/1/08 Interest payable Lease liability Cash 12/31/08 12/31/08 Interest expense Interest payable 3,192 3,192 13,750 4,377 11,851 16,228

Depreciation expense 13,750 Accumulated Depreciation

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Residual Values
Lessor Accounting for Residual Value Lessor works on the assumption that it will realize the residual value at the end of the lease term whether guaranteed or unguaranteed.

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSOR) Calculation of the annual rental payment.
Residual value PV of single sum (i=10%, n=4) PV of residual value Cost of equipment to be recovered Present value of residual value Amount to be recovered through lease payment PV factor of annunity due (i=10%, n=4) Annual payment required
x

$ $ $

5,000 0.68301 3,415 60,000 (3,415) 56,585 3.48685

16,228

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSOR) Prepare an amortization schedule that would be suitable for the Exceptional.
Lease Payment $ 16,228 16,228 16,228 16,228 5,000 4,377 3,192 1,889 454 * 10% Interest Revenue Recovery of Receivable $ 16,228 11,851 13,036 14,339 4,546 Lease Receivable $ 60,000 43,772 31,921 18,885 4,546 0

Date 1/1/07 1/1/07 12/31/07 12/31/08 12/31/09 12/31/10


* rounding

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSOR) Prepare all of the journal entries for the Exceptional for 2007 and 2008.
Journal entry 1/1/07 1/1/07 12/31/07 Lease receivable Equipment Cash Lease receivable Interest receivable Interest revenue 60,000 60,000 16,228 16,228 4,377 4,377

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Illustration (LESSOR) Prepare all of the journal entries for the Exceptional for 2007 and 2008.
Journal entry 1/1/08 Cash Lease receivable Interest receivable Interest receivable Interest revenue 16,228 11,851 4,377 3,192 3,192

12/31/07

LO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.

Special Accounting Problems


Sales-Type Leases (Lessor)
Primary difference between a direct-financing lease and a sales-type lease is the manufacturers or dealers gross profit (or loss).

Lessor records the sale price of the asset, the cost of goods sold and related inventory reduction, and the lease receivable.
Difference in accounting for guaranteed and unguaranteed residual values.
LO 8 Describe the lessors accounting for sales-type leases.

Special Accounting Problems


Bargain Purchase Option (Lessee)
Present value of the minimum lease payments must include the present value of the option. Only difference between the accounting treatment for a bargain purchase option and a guaranteed residual value of identical amounts is in the computation of the annual depreciation.

LO 6 Identify special features of lease arrangements that cause unique accounting problems.

Special Accounting Problems


Initial Direct Costs (Lessor)
The accounting for initial direct costs: For operating leases, the lessor should defer initial direct costs. For sales-type leases, the lessor expenses the initial direct costs. For a direct-financing lease, the lessor adds initial direct costs to the net investment.
LO 6 Identify special features of lease arrangements that cause unique accounting problems.

Special Accounting Problems


Current versus Noncurrent
FASB Statement No. 13 does not indicate how to measure the current and noncurrent amounts. It requires that for the lessee the obligations shall be separately identified on the balance sheet as obligations under capital leases and shall be subject to the same considerations as other obligations in classifying them with current and noncurrent liabilities in classified balance sheets.
LO 6 Identify special features of lease arrangements that cause unique accounting problems.

Special Accounting Problems


Disclosing Lease Data
1.

General description of the nature of the lease.

2. Nature, timing and amount of cash inflows and outflows

associated with leases, including payments for each of


the five succeeding years.
3. Amount of lease revenues and expenses reported in the

income statement each period.


4. Description and amounts of leased assets by major

balance sheet classification and related liabilities.


5. Amounts receivable and unearned revenues under lease.
LO 9 List the disclosure requirements for leases.