MAA363 Lecture Notes - Lecture 4: Finance Lease, Operating Lease, Interest Expense
Document Summary
Lease = (cid:858)a(cid:374) agree(cid:373)e(cid:374)t (cid:449)here(cid:271)y the lessor (cid:272)o(cid:374)(cid:448)eys to the lessee i(cid:374) retur(cid:374) for a pay(cid:373)e(cid:374)t or series of pay(cid:373)e(cid:374)ts o(cid:374) the right to use a(cid:374) asset for a(cid:374) greed period of ti(cid:373)e(cid:859: finance leases. If the risks and rewards incidental to the ownership transfer to the lessee: lessee should record a leased asset and a lease liability, operating leases (off balance sheet) If the risks and rewards incidental to the ownership remain with the lessor: lessee records neither the asset not liability, but lease payments are recorded as rental expenses. Include possibilities of losses from technological obsolescence, idle capacity, uninsured damage etc. Includes benefits from the use of the asset, appreciation in value of the asset etc. On july 1 2016, jess entered into a cancellable lease contract to lease equipment from cba. Fair value of equipment at inception of lease.
