Chapter 21 - Accounting for leases. In this chapter students will be able to: Explain the nature, economic substance, and advantages of lease transactions; describe the accounting criteria and procedures for capitalizing leases by the lessee; contrast the operating and capitalization methods of recording leases. | Prepared by Coby Harmon University of California, Santa Barbara Intermediate Accounting Intermediate Accounting Prepared by Coby Harmon University of California, Santa Barbara Westmont College INTERMEDIATE ACCOUNTING F I F T E E N T H E D I T I O N Prepared by Coby Harmon University of California, Santa Barbara Westmont College kieso weygandt warfield team for success PREVIEW OF CHAPTER Intermediate Accounting 15th Edition Kieso Weygandt Warfield 21 Describe the lessor’s accounting for direct-financing leases. Identify special features of lease arrangements that cause unique accounting problems. Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting. Describe the lessor’s accounting for sales-type leases. List the disclosure requirements for leases. After studying this chapter, you should be able to: LEARNING OBJECTIVES Explain the nature, economic substance, and advantages of lease transactions. Describe the accounting criteria and procedures for capitalizing leases by the lessee. Contrast the operating and capitalization methods of recording leases. Explain the advantages and economics of leasing to lessors and identify the classifications of leases for the lessor. Accounting for Leases 21 Different motivations for investing: To earn a high rate of return. To secure certain operating or financing arrangements with another company. Investment in Debt Securities LO 1 Largest group of leased equipment involves: Information technology equipment Transportation (trucks, aircraft, rail) Construction Agriculture A lease is a contractual agreement between a lessor and a lessee, that gives the lessee the right to use specific property, owned by the lessor, for a specified period of time. The Leasing Environment LO 1 The Leasing Environment LO 1 Illustration 21-2 What Do Companies Lease? Banks Who Are the Players? Captive Leasing Companies Independents Wells Fargo Chase Citigroup PNC Caterpillar Financial Services Corp. Ford Motor Credit . | Prepared by Coby Harmon University of California, Santa Barbara Intermediate Accounting Intermediate Accounting Prepared by Coby Harmon University of California, Santa Barbara Westmont College INTERMEDIATE ACCOUNTING F I F T E E N T H E D I T I O N Prepared by Coby Harmon University of California, Santa Barbara Westmont College kieso weygandt warfield team for success PREVIEW OF CHAPTER Intermediate Accounting 15th Edition Kieso Weygandt Warfield 21 Describe the lessor’s accounting for direct-financing leases. Identify special features of lease arrangements that cause unique accounting problems. Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting. Describe the lessor’s accounting for sales-type leases. List the disclosure requirements for leases. After studying this chapter, you should be able to: LEARNING OBJECTIVES Explain the nature, economic substance, and advantages of lease transactions. Describe the accounting criteria and procedures for .
