中級(jí)會(huì)計(jì)學(xué)英文版課件：ch18 Leases

1、Chapter 18 LeasesCopyright 2014 Pearson Canada Inc.18- 1L.O. 18-1. Evaluate the economic substance of a lease arrangement to determine the extent to which there is a transfer of risks and rewards. L.O. 18-2. Apply the general and specic criteria for classifying leases as nance (capital) or operating

2、 leases and apply the accounting method appropriate for that classication L.O. 18-3. Analyze a lease to determine the present value of minimum lease payments, the interest rate implicit in a lease, the lease payments required by the lessor, and lease amortization schedules.LEARNING OBJECTIVESCopyrig

3、ht 2014 Pearson Canada Inc.18- 2L.O. 18-4. Analyze the differences in nancial reporting outcomes when a lease is treated as a nance lease as compared to an operating lease, and understand the consequent preferences for nance or operating lease treatment by the lessor or lessee. L.O. 18-5. Apply the

4、presentation and disclosure requirements applicable to leases. L.O. 18-6. Describe the rationale for the deferral of gains or losses on sale-leaseback transactions and account for these transactions. LEARNING OBJECTIVES (Continued)Copyright 2014 Pearson Canada Inc.18- 3A. INTRODUCTIONLeases are wide

5、ly used by allLease - An agreement whereby the owner of an asset allows others the use of that asset in return for monetary or non-monetary considerationLessor - owner of the asset in a lease Lessee - renter in a lease contractCopyright 2014 Pearson Canada Inc.18- 4Types of LeasesOperating lease A t

6、ype of lease that is not a nance lease (does not substantially transfer all the risks and rewards of ownership)Finance lease (IFRS term) - A type of lease that transfers substantially all of an assets risks and rewards of ownership from the lessor to the lesseeFinance lease under ASPE is referred to

7、 as a “capital lease”For a lessor, a “capital” lease (under ASPE) has normal credit risk and no material unreimbursable costsCopyright 2014 Pearson Canada Inc.18- 5Accounting Impact of Types of LeasesOperating lease Lessee expenses cost of lease in period benefit is receivedFinance lease lessee reco

8、rds an asset for property being used and a liability for the obligation to make payments Copyright 2014 Pearson Canada Inc.18- 6Risk and Rewards and Lease ClassificationCopyright 2014 Pearson Canada Inc.18- 7Stages in Accounting for LeasesCopyright 2014 Pearson Canada Inc.18- 8CHECKPOINT CP 18-1 Wha

9、t is the Key issue in Accounting for Leases? Copyright 2014 Pearson Canada Inc.18- 9B. ECONOMICS OF LEASING (L.O. 18-1) Advantages of leasing:“100%” nancing of assets purchase pricePayment schedules more exible vs. loansOperating lease treatment results in off-balance-sheet nancing for lesseeLower a

10、fter-tax costs due to differences in tax rates for the lessor and lesseeCopyright 2014 Pearson Canada Inc.18- 10Disadvantages of Leases User who controls the asset during the lease is not the owner of the asset Reduced level of care due to separation of an assets ownership and its control (agency co

11、st)Lease will lower the propertys value at the end of the lease to an amount below what it would be without the leaseCopyright 2014 Pearson Canada Inc.18- 11Agency Cost of LeasingCopyright 2014 Pearson Canada Inc.18- 12Degree to which Agency Cost MattersDepends on a number of factors: 1. Inherent na

12、ture of the asset that is leased 2. Incentives of the lessee to maintain the condition of the leased asset 3. Regulations that require a high degree of care 4. Conditions negotiated between the lessor and lessee, including Bargain purchase option, and Guaranteed residual value 5. The length of the l

13、ease contractCopyright 2014 Pearson Canada Inc.18- 13Interest Rate Implicit in the lease Implicit interest rate - discount rate that is used, or implied to be used, by the lessor in the determination of the payments in a leaseCan be inferred from the payments schedule.Copyright 2014 Pearson Canada I

14、nc.18- 14CHECKPOINT CP 18-2 What is the principal economic loss from a leasing transaction? Why do leases exist despite this loss? Copyright 2014 Pearson Canada Inc.18- 15C. CLASSIFYING AND ACCOUNTING FOR OPERATING AND FINANCE LEASES (L.O. 18-2 AND L.O. 18-3)Crux of lease accounting who bears the ri

15、sk?“Risk” criterion is used to identify if lease is operating or finance Operating and finance leases are accounted for differentlyCopyright 2014 Pearson Canada Inc.18- 161. Lease ClassificationFinance lease transfers substantially all the risks and rewards of ownership to lesseeOperating lease risk

16、s and rewards not transferred to lesseeCopyright 2014 Pearson Canada Inc.18- 17Risks and Reward of OwnershipInclude:Risk of breakage and reward of longer-than-expected useful lifeRisk of obsolescence and reward of high resale valueRisks and rewards of changes in rental pricesRisks and rewards of cha

17、nges in demand for usage of the propertyCopyright 2014 Pearson Canada Inc.18- 18ASPE and IFRS termsLeases are classified to reflect the substance of the transactionASPE capital lease asset is recorded in the balance sheet (capitalized) IFRS finance lease generally need to borrow (finance) to purchas

18、e the same asset Copyright 2014 Pearson Canada Inc.18- 19CHECKPOINT CP 18-3What is the general criterion for deciding whether a lease is an operating or a finance lease? Copyright 2014 Pearson Canada Inc.18- 202. Supporting Indicators for Lease ClassificationAdditional capitalization guidelines unde

19、r IFRS:Transfer of ownership to lessee or a bargain purchase option (BPO) at the end of lease2. Lease term is a major part of assets economic life Present value of minimum lease payments comprises substantially all of the fair value of leased assetOnly lessee can use specialized lease asset without

20、modification. Any one condition enough to make it a finance leaseFor leases of land, only criterion 1 is applicableCopyright 2014 Pearson Canada Inc.18- 21ASPESpecific CriteriaCapitalization criteria under ASPE:Transfer of ownership to lessee or a bargain purchase option (BPO) at the end of lease(Tr

21、ansfer of ownership test)2. Lease term is 75% or more of economic life of asset (Economic life test)3. Present value of minimum lease payments is 90% or more of the fair value of the leased asset (Recovery of investment test)Copyright 2014 Pearson Canada Inc.18- 22 Additional criteria for lessors un

22、der ASPEFor lessor two additional indicators1. Lessees credit risk is normal2. Any unreimbursable costs arising from lease are reasonably estimable Both have to be satisfiedThus for the lessor to capitalize, any one of the first three criteria must be met plus these last two.Copyright 2014 Pearson C

23、anada Inc.18- 23Executory Costminimum lease payments (MLP) or “payments over the lease term that lessee is or can be required to make. . . .” excludes executory costsExecutory costs - incidental costs in a lease that would normally be incurred by the lessee whether asset leased or purchased (mainten

24、ance, taxes, insurance, etc)Executory costs are expensed in period incurredCopyright 2014 Pearson Canada Inc.18- 243. Accounting for Finance and Operating LeasesLessee records both the leased asset and lease obligation in the case of a finance leaseAccounts for depreciation/ amortizationAccounts for

25、 interest expense and the loan repaymentsCopyright 2014 Pearson Canada Inc.18- 25Accounting by Lessee (continued) Operating LeaseRent expense is recognized as asset is used. Dr. Rent Expense xxxCr. CashxxxIf payments are made in advance:Dr. Prepaid RentxxxCr. Cash xxxThen as periodic accruals are ma

26、deDr. Rent ExpensexxxCr. Prepaid RentxxxCopyright 2014 Pearson Canada Inc.18- 26Accounting by Lessee (continued) Finance LeaseAsset and Liability Recorded Dr. Leased Equipment * xxxCr. Obligation for Finance Lease xxx* recorded at the lower of (1) PV of the minimum lease payments, and (2) FMV of the

27、 leased assetRecording Periodic Payments Payment at inception of Lease: Dr. Executory Cost (name, if any), xxx Dr. Obligation for Finance Lease xxxCr. Cash xxxCopyright 2014 Pearson Canada Inc.18- 27Accounting by Lessee, finance lease (continued) Finance Lease Amortization Schedule: Lessee DateLease

28、 Payment(Periodic Payment Excluding Executory Costs) AInterest Expense(Discount Rate x Balance of Lease Obligation) BReduction in Lease Obligation (A - B)CBalance of Lease Obligation (Prior Years Balance - C) DCopyright 2014 Pearson Canada Inc.18- 28Accounting by Lessee, finance lease (continued)Ann

29、iversary Payments (if they coincide with year-end): Dr. Executory cost, (if any) xxx Dr. Interest Expense xxx Dr. Obligation for Finance Lease xxx Cr. Cash xxxIf Interest Expense has to be accrued at year-end: Dr. Interest Expensexxx Cr. Interest Payable (or Finance Lease obligation)xxxRecording Dep

30、reciation of Leased AssetDr. Depreciation Expense (Leased Asset)xxx Cr. Accumulated Depreciation (Leased Asset) xxxCopyright 2014 Pearson Canada Inc.18- 29Accounting by Lessee, finance lease (continued) Subsequent payment after accrual of interest expense.Dr. Dr. Executory Cost (name, if any)xxxDr.

31、Interest Expense (since accrual) xxxDr. Interest Payable (is account used)xxxDr. Obligation for Finance Lease xxx Cr. CashxxxEntry at end of Lease (may depend on terms)Dr. Accumulated Depreciation, Leased Asset xxxCr. Leased AssetxxxSee Exhibits 18-10 to 18-14Copyright 2014 Pearson Canada Inc.18- 30

32、Accounting by Lessee Finance Lease SummaryRecord leaseDr. Leased Asset Cr.Obligations for Finance LeaseAccrue interestDr. Interest ExpenseCr.Interest Payable (or Lease obligation)Depreciate leased assetDr. Depreciation ExpenseCr.Accumulated DepreciationRecord periodic lease paymentDr. Related Execut

33、ory Expense (if any)Dr. Interest PayableDr. Obligations under Capital LeaseCr.CashCopyright 2014 Pearson Canada Inc.18- 31Accounting for Finance and Operating Leases Lessor Lessor accounts for interest revenue and cash collected on the lease Assumptions used may be different from those used by lesse

34、e Results in different amounts being recorded Copyright 2014 Pearson Canada Inc.18- 32Accounting by Lessor Operating Lease Operating LeaseRisks and benefits of ownership of leased assets are not transferred to lesseeLease payments received are treated as rental revenueDr. CashxxxCr. Rental Revenuexx

35、xLease asset remains on lessors books and continues to be depreciatedDr. Depreciation expensexxxCr. Accumulated depreciationxxxCopyright 2014 Pearson Canada Inc.18- 33Accounting by Lessor Finance Lease Direct Financing LeaseTransfer of the Leased Asset: Dr. Lease Payments Receivable*xxx Cr. Asset (N

36、ame) Purchased for Lease xxx* Total lease payments over lease period (excluding executory costs) plus residual value or bargain purchase option less unearned finance income.Receipt at Inception of Lease:Dr. Cash xxxCr. Lease Payments Receivable xxxCr. Executory Costs (if any included ) xxxCopyright

37、2014 Pearson Canada Inc.18- 34Accounting for Finance Lease by lessor (Continued) Lease Amortization Schedule: Lessor DateLease Receipts(Periodic Receipts Excluding Executory Costs) AInterest Revenue(Discount Rate x Balance of Net Investment) BReduction in Net Investment (A - B)CBalance of Net Invest

38、ment (Prior Years Balance - C) DCopyright 2014 Pearson Canada Inc.18- 35Accounting for Finance Lease by lessor (Continued)Anniversary Receipts (if they coincide with year-end):Dr. Cash xxxCr. Lease Payments Receivable xxxCr. Interest Revenue - Leases xxxCr. Executory Costs (if any included ) xxxIf I

39、nterest Revenue has to be accrued at year-end:Dr. Unearned Interest Revenue xxx Cr. Interest Revenue xxxSee Exhibits 18-10 to 18-14Copyright 2014 Pearson Canada Inc.18- 36Accounting for Finance Lease by lessor (Continued)Sales-Type LeaseOnly the entry at the inception of the lease is different from

40、the entries under the direct financing-type leaseDr. Lease Payments Receivable xxx Cr. Sales Revenue xxx&Dr. Cost of Goods Soldxxx Cr. Inventory (Leased Asset) xxx Copyright 2014 Pearson Canada Inc.18- 37CHECKPOINT CP 18-4If a lease were classified as a finance lease, how would you describe the appr

41、oach to accounting for the lease in general? Copyright 2014 Pearson Canada Inc.18- 384. Preference for finance or Operating Lease Treatment (L.O. 18-4)Lessee prefers operating lease treatmentOperating lease keeps the asset and liability off the booksLiability impacts solvency ratiosMore favourable s

42、hort term treatment on the income statementCopyright 2014 Pearson Canada Inc.18- 39Preference for finance or operating Lease Treatment (Continued) Lessor prefers finance lease treatmentFinance lease transfers non-monetary item to monetary more liquidInterest revenue is reportedPayments recognized as

43、 revenue when earnedIncome generally higher in early years relative to operating lease incomeCopyright 2014 Pearson Canada Inc.18- 40Preference for finance or operating Lease Treatment (Continued) Lease Income Over TimeOver life of lease, cumulative income under either operating or finance lease tre

44、atment is exactly the sameCopyright 2014 Pearson Canada Inc.18- 415. Rationale for supporting indicators Relating to Lease Term and Present ValueWordings (“major part”; “substantially all”) may seem broad but are appropriate because:Length of time reducing the length results in higher costs for the

45、lesseeSubjectivity about estimated life wording anticipates earnings managementSubjectivity in present value calculations and fair value estimatesCopyright 2014 Pearson Canada Inc.18- 42CHECKPOINT CP18-5Why do supporting indicators for lease classification use “major part” and “substantially all” ra

46、ther that “all” in reference to the amount of time and value contained in the asset? Copyright 2014 Pearson Canada Inc.18- 436. Basic Numerical Examplea. Lease Classification Classify lease as either a finance or an operating lease based on criteria.b. Recording the Lease at inception the lease is r

47、ecorded on the books of the lessor and lesseec. Recording the Lease during the lease term lessor and lessee record payments received/paid, interest earned/paid, other costs/revenuesd. Accounting at the end of the lease the lessee takes the asset off its books and the lessor makes a memo entry (Exhib

48、it 18-14)Copyright 2014 Pearson Canada Inc.18- 44D. COMPLICATING FACTORS IN LEASES Five complicating factors in accounting for leases:1. Residual values - Guaranteed and unguaranteed2. Inclusion of bargain purchase options in minimum lease payments 3. Interest rate used in present value calculations

49、4. Cash flows to include in present value calculations5. Third party guaranteesCopyright 2014 Pearson Canada Inc.18- 451. Residual Values - Guaranteed and UnguaranteedLessee:Guaranteed residual value is part of minimum lease payments, included in present value determination. Unguaranteed residuals n

50、ot included in MLPsLessor: Residual values included in calculations, guaranteed or not. Copyright 2014 Pearson Canada Inc.18- 46 2. Inclusion of Bargain Purchase Options in Minimum Lease Payments Almost certain to be exercisedCost is another cash flow the lessor expects to receiveBPO is a part of mi

51、nimum lease payments; taken into account by both lessee and lessorCopyright 2014 Pearson Canada Inc.18- 473. Interest Rate Used in Present Value CalculationsLessor designs cash flows to give a desired rate of return (referred to as the “implicit rate”)Lessor must always use implicit rateIFRS - lesse

52、e uses the implicit rate if known; otherwise uses its incremental borrowing rate, - interest rate that would be paid on a similar lease or loanCopyright 2014 Pearson Canada Inc.18- 48Interest Rate Used in Present Value Calculations ASPE ASPE: Lessee uses lower of the two rates, if both are known.Res

53、ults in: maximizing present value of minimum lease payments Leased Asset, however, not recorded above fair valueCopyright 2014 Pearson Canada Inc.18- 494. Cash flows to be Included in Present Value Calculations Different Stages may use different amounts/calculations (See Exhibit 18-2) Determining le

54、ase pricing lessor takes into account all cash flowsb. Classifying a lease as finance or operating only amounts included in MLP used in calculationsDetermining amounts in lease amortization schedules depends on amount capitalized; may differ for lessee /lessor. See Exhibit 18-17Copyright 2014 Pearso

55、n Canada Inc.18- 505. Third-party guarantees: An example of rule avoidance Lessee may avoid capitalization if residual is large and unguaranteedThird party guarantors charge lessee fees for serviceLessor still recognizes guaranteed or unguaranteed residual value in calculationsLessor may capitalize

56、a lease that the lessee recognizes as operatingCopyright 2014 Pearson Canada Inc.18- 51Third-party Guarantees: An Example of Rule Avoidance (continued) Copyright 2014 Pearson Canada Inc.18- 52E. PRESENTATION AND DISCLOSURE (L.O. 18-5)Current/non-current classification of lease liability or lease rec

57、eivable.Lessee separates lease liability into current and non-current. (portion due in one year, and accrued interest reported as current) Lessor separate lease receivable into current and non-current along same lines Copyright 2014 Pearson Canada Inc.18- 532. DisclosuresSignificant disclosures requ

58、ired due to long-term lease commitments (See Exh. 18-20)Disclosures help users understand:Whether leases are usedTo what extent leases are usedHow a company uses leasesCopyright 2014 Pearson Canada Inc.18- 54F. SALE-LEASEBACK (L.O. 18-6)Copyright 2014 Pearson Canada Inc.18- 55F. SALE-LEASEBACK (L.O.

59、 18-6)Seller-lessee obtains financing but use of asset uninterrupted.Gain/loss on sale deferred over lease term in all capital/finance leasesIFRS permits immediate gain/loss recognition in operating leases if sales at fair value(See Exhibit 18-22)Copyright 2014 Pearson Canada Inc.18- 56CHECKPOINT CP

60、18-6Why are there special rules for sale-leaseback transactions?Copyright 2014 Pearson Canada Inc.18- 57G. SUBSTANTIVE DIFFERENCES BETWEEN RELEVANT IFRS AND ASPECopyright 2014 Pearson Canada Inc.18- 581. Qualitative guidelines for lease classificationIFRS and ASPE share same capitalization criteria;