BUS 321 Lecture 20: Chapter 20 - Notes Part 1 [Blank]

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 321
• Professor: simonsuwanyangyuan

Document Summary

Chapter 20 presents a discussion of the accounting issues related to leasing arrangements from the point of view of both the lessee and the lessor. Among the issues discussed are: (a) the classification of leasing arrangements, (b) accounting for leases, and (c) disclosure requirements. Leasing continues to grow in popularity as a form of asset-based financing. A lease is a contractual agreement between a lessor and a lessee that conveys to the lessee the right to use specific property (real or personal) owned by the lessor, for a specified period of time. In return for this right, the lessee agrees to make periodic cash payments (rents) to the lessor. An essential element of the lease conveyance is that the lessor conveys less than his/her total interest in the property. Without the standards on leases, the choice of leasing would produce a vastly different statement of financial position than the choice to borrowing (also, its consequences on financial ratios).