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FAR Ch. 5 (2)

Terms in this set (20)

Depreciation on a capital lease should be recorded by the lessee using the ASSET life when..............
The "O" or "W" is met in the OWNS pneumonic
"O" Ownership Transfers
"W" Written BPO.
Depreciation on a capital lease should be recorded by the lessee using the LEASE life when..............
The "N" or "S" is met in the OWNS pneumonic
"N" 90% (PV is 90% of FV)
"S" 75% (Lease life is 75% of economic Life)
As a General Rule under GAAP and IFRS, if the lessee keeps the asset, it should be depreciated using........
Asset Life
As a General Rule under GAAP and IFRS, if the lessor keeps the asset, it should be depreciated using..........
Lease Life
Profits on a Sale-Leaseback classified as a capital (finance) lease should be recorded under IFRS by.............
Capitalizing any gain and amortizing over the life of the lease.
Lease Improvements on an Operating Lease should be capitalized and amortized over................
The LESSER of Lease Life or Asset/Improvement Life
The Lessee should record a capital lease as an asset and liability at what cost?
The LESSER of FV or Cost (PV of Lease Payments)
The lessor should calculate sales revenue on a Capital Lease as.........
The PV of minimum lease payments AND GUARANTEED residual Value
On a Capital Lease, the lessor should recognize how many types of profits?
1. Gain on Sale
2. Interest Income
On a Direct Financing, the Lessor should recognize how many types of profits?
1. Interest Income
NO Sale
NO COGS
In an Operating Sale-Leaseback transaction, the amount of profit to be recorded is calculated by............
Gain On Sale (Sales Price-NBV)
- PV of Minimum Lease Payments
In a Capital Sale-Leaseback transaction, the amount of profit to be recorded is calculated by............
Gain On Sale (Sales Price-NBV)
- LESSER of FV or PV of Minimum Lease Payments
Under GAAP and IFRS, if a loss occurs..................
Recognize it Immediately. DO NOT DEFER!
Sales Price is often considered....................
Fair Value
If a transaction is a MAJOR Sale-Leaseback (PV>90% Of FV), then any gain should be...............
Deferred. Defer ALL Gain on a Major transaction.
If a transaction is a MIDDLE Sale-Leaseback transaction (PV<90% but >10% of FV), gain should be.................
Deferred up to PV of Leaseback. Recognize the rest immediately.
If a transaction is a MINOT Sale-Leaseback transaction (PV<10% of FV), gain should be................
NOT be Deferred. Recognize Gain or Loss at the time of the transaction
PV Equals........................
Annual Rent x Annuity Due PV Factor
In a Sales Type / Finance Lease, profit is calculated as..........
the difference between the FV and Carrying Value
In a Direct Financing Lease, the lessor computes accounts receivable as...............
Minimum Lease Payments PLUS Residual Value
THIS SET IS OFTEN IN FOLDERS WITH...