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Leases: lessor accounting and special cases

BAR Chapter 18 · Area II · Blueprint II.I

FAR covered lessee accounting. BAR turns the lease around and adds the hard cases: how a lessor classifies a lease and measures its receivable and income, how a seller-lessee records a sale and leaseback, and how to read a real lease agreement and decide whether the lessee got it right. Apex Equipment leases machines out, and its customer Northwind leases them in, so we see both sides of the same contracts.

In this chapter

1. How a lessor classifies a lease
2. Sales-type leases
3. Direct financing leases
4. Operating leases for the lessor
5. Reading a lease agreement as the lessee
6. Lessee entries: finance and operating
7. Sale and leaseback
8. Finding errors in lease accounting

This chapter has 8 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Lessor classification
• lease receivable and income
• sale and leaseback
• analysing a lease agreement for the lessee

Chapter 17: Derivatives and hedge accounting · Chapter 19: Public company reporting