Assertion: lease | /r/HasProperty | capital
Facets:
Source sentences:
text: This is not reported as part of the future minimum rental commitments disclosure, nor in the 7(d) test to determine whether the lease is capital or operating.
text: To distinguish the two, the Financial Accounting Standards Board (FASB) provided criteria for when a lease should be capitalized, and if any one of the criteria for capitalization is met, the lease is treated as a capital lease and recorded on the financial statements.
text: If the company owns the equipment or has an option to purchase the equipment at a bargain price at the end, the lease is considered capital.
text: If any one of these criteria is met, then the lease is considered a capital lease and if not then the lease is considered an operating lease.
text: Consequently the Financial Accounting Standards Board has ruled that a lease should be treated as an capital lease if it meets any one of the following four conditions -
text: If the lease agreement ends with the company owning the equipment or allows the company to buy the equipment at a reduced price at the conclusion of the lease term, the lease is considered a capital obligation.
text: The distinction between sales-type and direct financing leases has changed: whereas in ASC 840 the test was whether the fair value of the leased asset was different from the lessor's cost or carrying amount (if so, the lease is a sales-type lease), in ASC 842, any lessor lease that meets the lessee finance lease tests (based on rents and guaranteed residuals due from the lessee) is a sales-type lease; direct financing treatment applies if the lease is capital only because a third-party residual guarantee causes the present value test to be met.
text: While leasing may seem like a relatively straight forward process, the accounting and tax treatment of leases can vary greatly depending on if a lease is considered to be capital or operating in nature.
text: A lease must be treated as a capital lease if it meets any single one of the following 4 conditions: