1. See example excel files examples
Leases
Chapter 15 in Spiceland
See example excel files examples
File names: Leases

2. Topics: Operating Leases Capital Leases Determination of type of lease
Determination of amount of liability
Subsequent accounting
Leasing Accounting Controversy

3. Leases Operating Lease: Rental of asset
Lease payments are treated as operating expense
Capital Lease: Nominally rental of assets, actually more like an installment purchase

4. Capital Lease
FAS 13: one of the following criteria is met: capital lease:
Transfer of ownership
Bargain purchase clause
PV of lease payments => 90% of fair market value
Lease term => 75% of useful life

5. Capital Lease
Initially recorded at PV of lease payments (asset & liability)
Periodically:
Interest & depreciation expense (I/S)
Reduction of liability (B/S)