Thought (1 of 3)
Discuss GAAP for leases.
Thought (2 of 3)
Discuss the differences between GAAP for leases and IASB requirements for leases.
Thought (3 of 3)
Distinguish between direct financing and sales type leases.© BrainMass Inc. brainmass.com March 4, 2021, 9:35 pm ad1c9bdddf
GAAP for leases comes primarily from SFAS 13, which states that if any one of certain criteria is met a lease contract may be viewed, in substance, as an installment purchase of the leased property by the lessee. Such capital leases must be accounted for in the same manner as purchases of assets. Accordingly, the lessee in a capital lease recognizes an asset and a liability equal to the present value of the payments to be made under the lease. A lease that meets any of the following criteria is considered a capital lease:
? The lease transfers ownership of the property to the lessee by the end of the lease term.
? The lease contains a bargain purchase option.
? The lease term is equal to 75% or more of the estimated economic life of the property at the beginning of the lease term.
? The present value of the minimum lease payments at the inception of the lease is 90% or more of the fair value of the leased asset.
GAAP for lease is ...
Discuss GAAP for leases, differences with IASB, direct and sales type leases. Solution includes references