tailieunhanh - Lecture Financial reporting and analysis (6/e) - Chapter 12: Financial reporting for leases

Chapter 12 - Financial reporting for leases. After studying this chapter you will be able to understand: The structure of a lease, lessee’s incentives to keep leases off the balance sheet, the criteria used to classify leases on the lessee’s books, the financial statement effects of executory costs, residual values, purchase options and other aspects of lease contracts, the effects of capital lease versus operating lease treatment on the lessee’s financial statements,. | Financial Reporting for Leases Revsine/Collins/Johnson/Mittelstaedt/Soffer: Chapter 12 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education Learning objectives The structure of a lease. Lessee’s incentives to keep leases off the balance sheet. The criteria used to classify leases on the lessee’s books. The financial statement effects of executory costs, residual values, purchase options and other aspects of lease contracts. The effects of capital lease versus operating lease treatment on the lessee’s financial statements. Lessor accounting rules and how the financial reporting incentives of lessors are very different from that of lessees. 12- Learning objectives: Continued The difference between sales-type, direct financing, and operating lease treatment by lessors. How different lease accounting treatments can affect income and net asset balances. Sale/leaseback arrangements and other special leasing situations. The key differences between current GAAP and IFRS requirements for lease accounting and the changes proposed by the FASB and the IASB. How to use financial statement disclosure to estimate the financial statement effects of treating operating leases as capital leases. 12- Lease contracts A lease contract conveys the right to use an asset in exchange for a fee (the lease payment). The lessor typically retains legal title to the asset which reverts to the lessor at the end of the lease term. The asset’s expected fair value at the end of the lease is the residual value. At its inception, a lease is a mutually unperformed contract meaning that neither party has yet performed all of the duties called for in the contract. The accounting for unperformed contracts is controversial. Lessee Lessor Wants to use the asset Owns the asset Right to use Lease payment 12- Evolution of lease accounting: Differences between Operating and Capital Leases 12- . | Financial Reporting for Leases Revsine/Collins/Johnson/Mittelstaedt/Soffer: Chapter 12 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education Learning objectives The structure of a lease. Lessee’s incentives to keep leases off the balance sheet. The criteria used to classify leases on the lessee’s books. The financial statement effects of executory costs, residual values, purchase options and other aspects of lease contracts. The effects of capital lease versus operating lease treatment on the lessee’s financial statements. Lessor accounting rules and how the financial reporting incentives of lessors are very different from that of lessees. 12- Learning objectives: Continued The difference between sales-type, direct financing, and operating lease treatment by lessors. How different lease accounting treatments can affect income and net asset balances. Sale/leaseback arrangements and .