西方財務(wù)會計 原版課件21

1、C H A P T E R 21ACCOUNTING FOR LEASESIntermediate Accounting13th EditionKieso, Weygandt, and Warfield 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 capitali

2、zation methods of recording leases.Identify the classifications of leases for the lessor.Describe the lessors accounting for direct-financing leases.Identify special features of lease arrangements that cause unique accounting problems.Describe the effect of residual values, guaranteed and unguarante

3、ed, on lease accounting.Describe the lessors accounting for sales-type leases.List the disclosure requirements for leases.Learning ObjectivesLeasing EnvironmentWho are players?Advantages of leasingConceptual nature of a leaseAccounting by LesseeAccounting by LessorSpecial Accounting ProblemsCapitali

4、zation criteriaAccounting differencesCapital lease methodOperating methodComparisonResidual valuesSales-type leasesBargain-purchase optionInitial direct costsCurrent versus noncurrentDisclosureUnresolved problemsEconomics of leasingClassificationDirect-financing methodOperating methodAccounting for

5、LeasesLargest group of leased equipment involves: Information technologyTransportation (trucks, aircraft, rail)ConstructionAgricultureLO 1 Explain the nature, economic substance, and advantages of lease transactions.A lease is a contractual agreement between a lessor and a lessee, that gives the les

6、see the right to use specific property, owned by the lessor, for a specified period of time.The Leasing EnvironmentThree general categories: Banks.Captive leasing companies.Independents.LO 1 Explain the nature, economic substance, and advantages of lease transactions.Who Are the Players?The Leasing

7、Environment100% Financing at Fixed Rates. Protection Against Obsolescence.Flexibility.Less Costly Financing.Tax Advantages.Off-Balance-Sheet Financing.The Leasing EnvironmentLO 1 Explain the nature, economic substance, and advantages of lease transactions.Advantages of LeasingCapitalize a lease that

8、 transfers substantially all of the benefits and risks of property ownership, provided the lease is noncancelable.Leases that do not transfer substantially all the benefits and risks of ownership are operating leases.The Leasing EnvironmentLO 1 Explain the nature, economic substance, and advantages

9、of lease transactions.Conceptual Nature of a LeaseOperating LeaseCapital LeaseJournal Entry: Rent expense xxx Cash xxxJournal Entry: Leased equipment xxx Lease liability xxxThe issue of how to report leases is the case of substance versus form. Although technically legal title may not pass, the bene

10、fits from the use of the property do.A lease that transfers substantially all of the benefits and risks of property ownership should be capitalized (only noncancellable leases may be capitalized).The Leasing EnvironmentLO 1 Explain the nature, economic substance, and advantages of lease transactions

11、.If the lessee capitalizes a lease, the lessee records an asset and a liability generally equal to the present value of the rental payments.Records depreciation on the leased asset.Treats the lease payments as consisting of interest and principal.Accounting by the LesseeLO 2 Describe the accounting

12、criteria and procedures for capitalizing leases by the lessee.Typical Journal Entries for Capitalized LeaseIllustration 21-2To record a lease as a capital lease, the lease must be noncancelable.One or more of four criteria must be met:Transfers ownership to the lessee.Contains a bargain-purchase opt

13、ion.Lease term is equal to or greater than 75 percent of the estimated economic life of the leased property.The present value of the minimum lease payments (excluding executory costs) equals or exceeds 90 percent of the fair value of the leased property.Accounting by the LesseeLO 2 Describe the acco

14、unting criteria and procedures for capitalizing leases by the lessee.LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Lease AgreementLeases that DO NOT meet any of the four criteria are accounted for as Operating Leases.Accounting by the LesseeIllustration 2

15、1-4Capitalization CriteriaLO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeTransfer of Ownership TestNot controversial and easily implemented.Bargain-Purchase Option TestAt the inception of the lease, the difference between the option

16、 price and the expected fair market value must be large enough to make exercise of the option reasonably assured.Capitalization CriteriaLO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeEconomic Life Test (75% Test)Lease term is genera

17、lly considered to be the fixed, noncancelable term of the lease. Bargain-renewal option can extend this period. At the inception of the lease, the difference between the renewal rental and the expected fair rental must be great enough to make exercise of the option to renew reasonably assured.Recove

18、ry of Investment Test (90% Test)LO 2Accounting by the LesseeMinimum Lease Payments:Minimum rental paymentGuaranteed residual valuePenalty for failure to renewBargain-purchase optionExecutory Costs:InsuranceMaintenanceTaxesExclude from PV of Minimum Lease Payment CalculationCapitalization CriteriaAcc

19、ounting by the LesseeDiscount RateLessee computes the present value of the minimum lease payments using its incremental borrowing rate, with one exception.If the lessee knows the implicit interest rate computed by the lessor and it is less than the lessees incremental borrowing rate, then lessee mus

20、t use the lessors rate.Recovery of Investment Test (90% Test)Capitalization CriteriaLO 2Asset and Liability Recorded at the lower of:present value of the minimum lease payments (excluding executory costs) orfair-market value of the leased asset.Asset and Liability Accounted for DifferentlyLO 2 Descr

21、ibe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeLO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeDepreciation PeriodIf lease transfers ownership, depreciate asset over the econo

22、mic life of the asset.If lease does not transfer ownership, depreciate over the term of the lease.Asset and Liability Accounted for DifferentlyLO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeEffective-Interest MethodThe effective-int

23、erest method is used to allocate each lease payment between principal and interest.Asset and Liability Accounted for DifferentlyDepreciation ConceptDepreciation and the discharge of the obligation are independent accounting processes.E21-1 (Capital Lease with Unguaranteed Residual Value): On January

24、 1, 2011, Adams Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Adams to make annual payments of $9,968 at the beginning of each year, starting January 1, 2011. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual val

25、ue. Adams uses the straight-line method of depreciation for all of its plant assets. Adamss incremental borrowing rate is 10%, and the Lessors implicit rate is unknown.LO 2Accounting by the LesseeInstructionsWhat type of lease is this? Explain. Compute the present value of the minimum lease payments

26、.Prepare all necessary journal entries for Adams for this lease through January 1, 2012.E21-1: What type of lease is this? Explain.LO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeCapitalization Criteria:Transfer of ownershipBargain p

27、urchase optionLease term = 75% of economic life of leased propertyPresent value of minimum lease payments = 90% of FMV of propertyNONOLease term 5 yrs.Economic life6 yrs. YES83.3%FMV of leased property is unknown.Capital Lease, #3E21-1: Compute present value of the minimum lease payments.LO 2 Descri

28、be the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseePayment $ 9,968Present value factor (i=10%,n=5) 4.16986PV of minimum lease payments $41,565 Leased Machine Under Capital Leases41,565Lease Liability 41,565Lease Liability 9,968Cash9,9681/1/11 Jour

29、nal Entries:E21-1: Lease Amortization ScheduleLO 2 Describe the accounting criteria and procedures for capitalizing leases by the lessee.Accounting by the LesseeE21-1: Journal entries for Adams through Jan. 1, 2012.LO 2 Describe the accounting criteria and procedures for capitalizing leases by the l

30、essee.Accounting by the LesseeDepreciation Expense8,313Accumulated DepreciationCapital Leases 8,313($41,565 5 = $8,313)Interest Expense3,160Interest Payable 3,160($41,565 $9,968) X .1012/31/11E21-1: Journal entries for Adams through Jan. 1, 2012.LO 2 Describe the accounting criteria and procedures f

31、or capitalizing leases by the lessee.Accounting by the LesseeLease Liability6,808Interest Payable3,160Cash9,9681/1/12LO 3 Contrast the operating and capitalization methods of recording leases.Accounting by the LesseeOperating MethodThe lessee assigns rent to the periods benefiting from the use of th

32、e asset and ignores, in the accounting, any commitments to make future payments.Illustration: Assume Adams accounts for it as an operating lease. Adams records this payment on January 1, 2011, as follows.Rent Expense 9,968Cash 9,968E21-1: Comparison of Capital Lease with Operating LeaseLO 3 Contrast

33、 the operating and capitalization methods of recording leases.Accounting by the LesseeInterest Revenue.Tax Incentives.High Residual Value.Accounting by the LessorBenefits to the LessorLO 4 Identify the classifications of leases for the lessor.A lessor determines the amount of the rental, based on th

34、e rate of return needed to justify leasing the asset.If a residual value is involved (whether guaranteed or not), the company would not have to recover as much from the lease paymentsEconomics of LeasingAccounting by the LessorLO 4 Identify the classifications of leases for the lessor.E21-10 (Comput

35、ation of Rental): Fieval Leasing Company signs an agreement on January 1, 2010, to lease equipment to Reid Company. The following information relates to this agreement.The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years.The c

36、ost of the asset to the lessor is $343,000. The fair value of the asset at January 1, 2010, is $343,000.The asset will revert to the lessor at the end of the lease term at which time the asset is expected to have a residual value of $61,071, none of which is guaranteed.The agreement requires annual

37、rental payments, beg. Jan. 1, 2010.Collectibility of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor.Accounting by the LessorLO 4 Identify the classifications of leases for the lessor.Accounting by th

38、e LessorLO 4 Identify the classifications of leases for the lessor.E21-10 (Computation of Rental): Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required. x-Operating leases.Direct-financing leases.Sales-type leases.Classificati

39、on of Leases by the LessorAccounting by the LessorLO 4 Identify the classifications of leases for the lessor.Classification of Leases by the LessorAccounting by the LessorLO 4 Identify the classifications of leases for the lessor.A sales-type lease involves a manufacturers or dealers profit, and a d

40、irect-financing lease does not.Illustration 21-10Classification of Leases by the LessorAccounting by the LessorLO 4 Identify the classifications of leases for the lessor.A lessor may classify a lease as an operating lease but the lessee may classify the same lease as a capital lease.Illustration 21-

41、11In substance the financing of an asset purchase by the lessee.Direct-Financing Method (Lessor)Accounting by the LessorLO 5 Describe the lessors accounting for direct-financing leases.Accounting by the LessorE21-10: Prepare an amortization schedule that would be suitable for the lessor. LO 5 Descri

42、be the lessors accounting for direct-financing leases.Accounting by the LessorE21-10: Prepare all of the journal entries for the lessor for 2010 and 2011.LO 5 Describe the lessors accounting for direct-financing leases.1/1/10 Lease Receivable343,000Equipment343,0001/1/10 Cash64,400Lease Receivable64

43、,40012/31/10 Interest Receivable 27,860Interest Revenue27,860Accounting by the LessorE21-10: Prepare all of the journal entries for the lessor for 2010 and 2011.LO 5 Describe the lessors accounting for direct-financing leases.1/1/11 Cash64,400Lease Receivable36,540Interest Receivable 27,86012/31/11

44、Interest Receivable 24,206Interest Revenue24,206Records each rental receipt as rental revenue. Depreciates the leased asset in the normal manner.Operating Method (Lessor)Accounting by the LessorLO 5 Describe the lessors accounting for direct-financing leases.Illustration: Assume Fieval accounts for

45、the lease as an operating lease. It records the cash rental receipt as follows:Operating Method (Lessor)Accounting by the LessorLO 5 Describe the lessors accounting for direct-financing leases.Cash64,400Rental Revenue64,400Depreciation is recorded as follows:Depreciation Expense57,167Accumulated Dep

46、reciation57,167$343,000 / 6 years = 57,167Residual values.Sales-type leases (lessor).Bargain-purchase options.Initial direct costs.Current versus noncurrent classification.Disclosure.Special Accounting ProblemsLO 6 Identify special features of lease arrangements that cause unique accounting problems

47、.Meaning of Residual Value - Estimated fair value of the leased asset at the end of the lease term.Guaranteed Residual Value Lessee agrees to make up any deficiency below a stated amount that the lessor realizes in residual value at the end of the lease term.Residual ValuesSpecial Accounting Problem

48、sLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Lessee Accounting for Residual ValueThe accounting consequence is that the minimum lease payments, include the guaranteed residual value but excludes the unguaranteed residual value.Residual ValuesSpecial

49、Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Illustration (Guaranteed Residual Value Lessee Accounting): Caterpillar Financial Services Corp. (a subsidiary of Caterpillar) and Sterling Construction Corp. sign a lease agreement dated

50、 January 1, 2011, that calls for Caterpillar to lease a front-end loader to Sterling beginning January 1, 2011. The terms and provisions of the lease agreement, and other pertinent data, are as follows.The term of the lease is five years. The lease agreement is noncancelable, requiring equal rental

51、payments at the beginning of each year (annuity due basis).The loader has a fair value at the inception of the lease of $100,000, an estimated economic life of five years, and no residual value. Special Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on l

52、ease accounting.Illustration (Guaranteed Residual Value Lessee Accounting):Sterling pays all of the executory costs directly to third parties except for the property taxes of $2,000 per year, which is included as part of its annual payments to Caterpillar. The lease contains no renewal options. The

53、loader reverts to Caterpillar at the termination of the lease. Sterlings incremental borrowing rate is 11 percent per year.Sterling depreciates on a straight-line basis.Caterpillar sets the annual rental to earn a rate of return on its investment of 10 percent per year; Sterling knows this fact.Cate

54、rpillar estimates a residual value of $5,000 a the end of the lease.Special Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Illustration (Guaranteed Residual Value Lessee Accounting):Caterpillar would compute the amount of the lease pa

55、yments as follows:Special Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Illustration 21-16NOTE: For the Lessee, the minimum lease payment includes the guaranteed residual value but excludes the unguaranteed residual value.Solution on

56、 notes pageIllustration 21-17Illustration (Guaranteed Residual Value Lessee Accounting):Computation of Lessees capitalized amountSpecial Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Solution on notes pageIllustration (Guaranteed Res

57、idual Value Lessee Accounting):Computation of Lease Amortization ScheduleIllustration 21-18Special Accounting ProblemsLO 7Illustration (Guaranteed Residual Value Lessee Accounting):At the end of the lease term, before the lessee transfers the asset to Caterpillar, the lease asset and liability accou

58、nts have the following balances.Illustration 21-19Special Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Illustration (Guaranteed Residual Value Lessee Accounting):Assume that Sterling depreciated the leased asset down to its residual

59、 value of $5,000 but that the fair market value of the residual value at December 31, 2015, was $3,000. Sterling would make the following journal entry.Special Accounting ProblemsLO 7 Describe the effect of residual values, guaranteed and unguaranteed, on lease accounting.Loss on Capital Lease 2,000

60、.00Interest Expense (or Interest Payable) 454.76Lease Liability 4,545.24Accumulated DepreciationCapital Leases 95,000.00Leased Equipment under Capital Leases 100,000.00Cash 2,000.00Illustration (Unguaranteed Residual Value Lessee Accounting):Assume the same facts as those above except that the $5,00