Leases: Lessee Perspective (Portfolio 5117)
This Portfolio explains and analyzes financial accounting for leases from the perspective of the lessee and explores the dynamics of the relationship between lessees and lessors with respect to the motivations behind leasing and the economic and financial reporting perspectives of leasing.
BNA Tax and Accounting Portfolio 5117, Leases: Lessee Perspective (Accounting Policy and Practice Series), explains and analyzes financial accounting for leases from the perspective of the lessee and explores the dynamics of the relationship between lessees and lessors with respect to the motivations behind leasing and the economic and financial reporting perspectives of leasing. The Portfolio explains in detail why lessees enter into leasing transactions. It also comprehensively discusses pricing considerations for lessees.
Definitions of leasing terms play an important part in classifying leases. From the lessee’s point of view, the portfolio analyzes pertinent definitions from accounting, structuring, economic, and practical perspectives. Because, however, leases often involve complex customized contractual agreements among several parties, the lessee must analyze the specific facts and circumstances of the agreements before classifying the lease as a capital lease or as an operating lease. The Portfolio discusses in detail the lease classification tests and the rules for recording both operating and capital leases.
This Portfolio enhances the user’s understanding of GAAP by explaining and interpreting specific circumstances embodied in the general definition and terminology used when classifying a lease. It considers the rationales underlying the positions of the Financial Accounting Standards Board (FASB).
Worksheet 1 provides a glossary defining significant terms and acronyms used in this Portfolio. The Worksheets also include examples of quantitative analyses that enter into leasing decisions and examples of how selected public companies have disclosed leasing transactions.
The second in a sub-series of portfolios on accounting for leases, this work augments APP 5114, Accounting for Leases: Fundamental Principles. Additional titles focus on sale-leaseback transactions, other special topics, and leasing from the lessor’s perspective. The FASB and the International Accounting Standards Board (IASB) are collaborating to revise and converge their standards on Accounting for Leases. This Portfolio will be updated as necessary to reflect any new rules or principles. For a summary of the most recently proposed rules and their potential impact on lessee accounting, see APP 5114, Accounting for Leases: Fundamental Principles at Section I.D.
This Portfolio may be cited as BNA Tax and Accounting Portfolio 5117, Sebik & Starczewski, Leases: Lessee Perspective (Accounting Policy and Practice Series).
Table of Contents
I. Introduction, Scope, and Purposes of Portfolio
II. Reasons for Leasing From the Lessee’s Perspective
III. Pricing Considerations for Lessees
IV. Financial Accounting and Reporting: Lessee Perspective
V. Recording the Lease
Director, Tax Reporting