Many U.S. companies have become heavily involved in leasing assets rather than owning them. For example, according to the Equipment Leasing Association (ELA), the global equipment-leasing market is a $600-$700 billion business, with the U.S. accounting for about one-third of the global market. Any type of equipment can be leased, such as railcars, helicopters, bulldozers, barges, CT scanners, computers, and so on. The largest group of leased equipment involves information technology equipment, followed by assets in the transportation area (trucks, aircraft, rail), and then construction and agriculture. This course discusses the accounting, reporting, and disclosures of leases by lessees and lessors. It includes a discussion of sale-leasebacks, subleases, renewals and extensions, terminations, leveraged leases, and other issues.
Upon successful completion of this course, participants will be able to:
- Recognize the advantages and disadvantages of leasing.
- Identify characteristics and differences between the operating and capital lease method.
- Recognize the characteristics and differences between operating, direct financing, and sales-type methods.
- Recognize the characteristics of various types of leases, key terms, included costs, and recognition requirements when accounting for leases.
- Compute leased asset and depreciation expense entries.
- Recognize differences between GAAP and IFRS when accounting for leases.
Table of Contents
The Leasing Market
Capital Lease Method
Residual Value Considerations
Transfer of Lease Receivable
Subleases and Similar Arrangements
Modifications and Terminations
Renewals and Extensions
Disposal of a Business Segment
Current Value Financial Statements
Real Estate Leases
Land and Building
Land, Building, and Equipment
Portion of a Building
Sale-Leaseback Involving Real Estate
Annual Report References
Review Question Answers and Rationales
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