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Flashcards in Capital Lease Deck (15):

What is the treatment for lease bonus paid by lessor?

Recognize over the period of lease term, not the whole amount for lessor, and amortized by lessee as well.


When to recognize operations lease revenue?

In the period specified by the lease


When recording for lessor on capital lease, what is the sum amount to be recorded?

MLR = lease received * periods of payment + any unguaranteed or guaranteed BPO amount / RV, no present value needed.

The unearned interest revenue = total MLR - PV of payment and BPO

Equipment amount is the same as lessee recorded PV of MLP unless it is given the cost of the asset

Sales is always the PV of MLP


How to do with cost of good sold if there are RV value at the end of the lease term for lessor when giving the cost of the asset?

Cost - PV of RV


With guaranteed RV from lessee, how to record the lease receivable for lessor?

Lease receivable. Xx
Unearned interest xx
Equipment. MLP+PV of guaranteed RV

Lessee MLP exclude unguaranteedRV
Lessor MLR. Include unguaranteedRV


With third party unguaranteed RV, how to record lease receivable for lessor?

Lease receivable. Xx ( period MLR x period)
COGS. XX. ( equipment cost - PV of unguaranteedRV)
Unearned interest. Plug figure
Equipment. (Always the actual cost) XX
Sales (PV OF MLR - PV of RV). Xx
Sales = lessee record MLP

COGS. 150000
Equipment. 150000


What is the COGS for guarantee and unguaranteed RV?

COGS = equipment

COGS =equipment -PV unguaranteed RV


Lease sales back rules for what is deferred?

For both capital and operating lease, most of the gain and losses are deferred, should be recognized over the term of lease

UNLESS: the new lease term is less than 10% of the useful life of asset, then recognized gain right away!


Sales lease back gain loss determined by?

Sales price and carrying value of asset
If not minor leaseback (lease term


Does MLP included the failure to new penalty?



Nature of Mandatory Redeemable P/S

It's equity, but like a debt


Convertible bonds is debt or equity?

Equity, but debt upon conversion


If given fixed stock shares for service provided, who has risk and what is the settlement?

If service provider have the risk, it's equity

If service consume party have the risk, it's debt

If shares fixed, price in future can change, no matter what, the value is going to be he value at future point.

If price is fixed, shares various, price increase, shares decrease, price decrease, more shares are needed.


IFRS how to record item is debt or equity?

Depends on substance of transaction
If issuer required to transfer cash or other asset - liability
If can separate compound of instrument, no separation of debt or equity value


If company issued put option for service received at fixed shares, when the price of shares increase, how to record it?

1. Cash. Fair Value of stock at that time
Liability of put option. Xx

When settle the payment
2. Loss on put option
Put option liability