The Lease Of A Lease - 965 Words

From the previous example, we learned the Type A leases aligned with capital leases, and Type B leases aligned with operating leases, with a few differences. Under Type A leases, a lessee would recognize interest expense and reduction in liability and separately amortize the right-of through depreciation. Under Type B leases, a lessee would recognize a single lease expense each year and directly credit the right-of-use asset the amount of amortization. Advantage From an investor s perspective, the Proposed Standards would provide more transparency with regard to financial information disclosure. Under the current standard, operating leases are often categorized as off-balance-sheet financing. Financial statements might not be sufficient to reveal the true financial status of the company, especially for businesses heavily involved in leasing transactions such as real estate, trucks, manufacturing equipment, and constructions. However, the Proposed Standards require a comprehensive disclosure of assets and liabilities for both Type A and Type B leases. Investors in turn could obtain higher quality financial statements which better indicate leverage, operating assets, and risks of companies. Disadvantages First, the proposed classification provision removes the quantitative test standard, which explicitly indicates the numeric threshold such as lease term and contract value to determine the classification of lease. Instead, the new standard emphasized on the portion of theShow MoreRelatedLease Of Lease : Lease1207 Words   |  5 PagesLEASE THIS LEASE is made on April 25, 2016. BETWEEN the Tenant(s) TOM AND SONIA SMITH, whose address is 123 Main Street, Northampton, Pennsylvania, referred to as the â€Å"Tenant† or â€Å"Tenant(s) or â€Å"Tenets’†. AND the Landlord JAMES STECKER, whose address is 123 Main Street, Northampton, Pennsylvania, referred to as the â€Å"Landlord†. The word â€Å"Tenant(s)† means each â€Å"Tenant† named above. 1. Property. The Tenant(s) are to pay a monthly stipend which shall be referred to as rent and the Landlord agreesRead MoreLeases And The Lease Of Lease1650 Words   |  7 PagesLeases are an arranged contract in which the lessor (the owner) provides the lessee (the user) the right to use an asset (car, apartment, equipment, etc.) for a specified time period. To be able to do this, the lessee must agree to make arranged periodic payments during the term of the lease. An example of this would be like an apartment lease it’s a typical rental agreement in which the basic rights and responsibilities of ownership are retained by the lessor; the lessee merely uses the asset (apartmentRead MoreLease Of Lease And Operating Lease Essay893 Words   |  4 Pagesfound from the IAS 17; the lease is defined that â€Å"A lease is an arrangement whereby the lessor coveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of timeâ₠¬ . (IAS 17, 2003). There are two types of lease: finance lease and operating lease. The following parts will identify them separately and accounting treatments will be discussed in lessees’ and lessors’ aspect. Firstly, it is the finance lease and it is a lease that transfers substantiallyRead MoreLease Of A Capital Lease1981 Words   |  8 Pages Leases Based off of the readings from our text, notwithstanding of the legal form of the agreement, a lease is accounted for as either a rental agreement or a purchase/sale supplemented by debt financing depending on the leasing prearrangement. However, the amount of professional judgment and ethical duty needed to determine the different type of leases, firms easily can hide the real interworking of their balance sheet. When a firm is accounting for leases, an operating lease records no assetRead MoreLease1172 Words   |  5 PagesSable sells and leases equipment to its customers. * Sable entered into a contract with Buildit Co. leasing a bulldozer for construction. * The lease term is 10 years and the economic and useful life of the bulldozer is 15 years. * Annual lease payments due at the end of every year will be $16,000. * Buildit is responsible for maintenance, insurance, and tax payments arising from the lease. * The residual value of the bulldozer at the end of the lease term is estimatedRead MoreThe Lease For A Commercial Lease711 Words   |  3 PagesWhen you as the property manager look at a commercial lease for the first time, it is wise to use some form of checklist for the process. That will prevent you making mistakes and or overlooking the essential elements of occupancy that impact the property for the landlord and the tenant. Every lease will be unique to the particular occupancy, the property location, the focus of the landlord, and the operations of the tenancy. We have listed below some of the key issues to incorporate into the dueRead MoreTo Lease or Not to Lease Essay918 Words   |  4 PagesTo Lease or Not to Lease There is always much debate around the subject or owning vs. leasing, anything. We all immediately assume owning is the right choice because why lease it when you can own it, right? Or maybe wrong? I will further discuss the advantages and disadvantage of leasing a medical office, medical equipment and office furniture. Medical Office or Headquarters Advantages of leasing a medical office over owning is freeing up working capital. With the money that is freed up fromRead MoreThe Current Lease Standard, Leases, And Lease Liabilities921 Words   |  4 Pagesstandard No. 2016-02, Leases (Topic 842) to the current lease standard. Under the new standard, leases with terms of greater than 12 months be shown as a right-of-use lease asset and a leased liability on the balance sheet. The key disparity between preceding Generally Accepted Accounting Principles (â€Å"GAAP†) and Topic 842 is that the lessee should recognize right-of-use leases as assets and lease liabilities, for those leases that have a and were previously classified as operating leases. The central principleRead MoreCapital Leases and Operating Leases Essay1493 Words   |  6 PagesACCT 3303 | CAPITAL LEASE vs. OPERATING LEASE | | Dr. Serge Ryno ACCT 3303 December 2, 2011 Capital Lease vs. Operating Lease Firms often choose to lease long-term assets rather than buy them for a variety of reasons including the tax benefits that are greater to the lessor than the lessees and leases offer more flexibility in terms of adjusting to changes in technology and capacity needs. Lease payments create the same kind of obligation that interest payments on debt create, andRead MoreLease Of Capital Lease Vs. Operating Leases1044 Words   |  5 PagesLeases Capital Leases vs. Operating Leases The most significant difference between a capital lease and an operating lease is how each is recognized in the financial statements. According to U.S. GAAP, a lease is capitalized if it fulfills one of the following requirements: transfer of ownership, bargain purchase option, lease term is 75% or more of economic life, or present value of minimum lease payments is 90% or more of fair value. All other lease agreements are classified as operating leases