Summary : The New Lease Standard

Your first attempt at generating the financial statements is commendable. I have outlined and included an analysis and recommendation to deal with each issue you identified in your notes. Attached is an Excel file in which you will find the correcting entries, the required adjustments to the draft Financial Statements and additional details related to calculations for the lease agreement.

Another way to treat this provision would be not to recognize at the inception of the lease but directly expense the costs when the required maintenance is performed. Regarding the accrual method in Alternative 1, ASC 360-15-25-5 prescribes “the use of accrue-in-advance (accrual) method of accounting for planned maintenance activities is prohibited in annual and interim financial reporting periods.” This is consistent to FASB’s opinion

In section 4 of exhibit D lists the sublease and assignment terms of the commercial lease agreement. An assignment of a lease is a complete transfer of the lease to a new tenant. (Pincus, 1997) Exhibit D, Commercial lease agreement, states the tenant may assign the

After adjusting lease expense, it is important to reformulate Income Statement and Balance Sheet to reflect the effect of the adjustments to MYX’s financial statements. To transfer operating lease to financial lease, the remove of lease expense will rise NOPBT by dropping the operating expense. As the nature of asset will be consumed during its economic life, amortisation on lease asset will incur which will plus its operating expense and discount NOPBT.

Research has been performed for your client to give informative information about leases and lease structures. Through this research there are three sub-types of leases from the standpoint of the lessor, which are direct financing leases, sales-type leases, and operating leases. The information found on the Financial Accounting Standards Board website pertaining to each type of lease will guide your client to making an appropriate decision regarding which type of lease will be beneficial to their company.

A statement of the terms of the lease to the property must be present. Id. In these facts, YTNH and Mr. Massey agreed to five years of rental with the first year at a rate of four dollars per square foot, and the years thereafter, at an annual rental rate that would automatically change in accordance with the Consumer Price Index for the South Urban region.

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement

While working on a consulting engagement, a supervisor in the team has given an assignment. The client is a regional trucking company. A new customer has approached the client with an opportunity that would require 120 trailers—20 more than the trucking company currently owns. The client is uncertain how long the relationship with the customer may last, but the deal has the potential for significant growth. The supervisor has asked a research to be conducted on leases and lease structure issues on the Financial Accounting Standards Board (FASB) website, in particular the current practice and thought related to direct financing, sales type, and operating leases. This paper is a memo addressed to the supervisor that summarizes

Although many variations of lease financing are available, potential lessees should be familiar with two general types of leases: the full payout lease and the fair market value (FMV) lease. The choice of lease is based upon the lessees’ long-term plans for the asset involved. A full payout lease is one in which the present value of the payment stream equals the acquisition cost of the asset. Options at the end of the lease typically include return, renewal, or purchase often for $1. The lessee is able to deploy and utilize the equipment, while the periodic payments of the full payout lease ease the financial burden of making a large IT acquisition. This option is a good choice when future ownership is desired, the dollar value of the equipment is substantial, the expected productive life of the assets is longer than five years, and the flexibility of spreading out payments would

2.1*This lease shall be a monthly lease commencing on the .......... day of ............................. 20........ (“the commencement date”) and terminable by either party giving to the other one calendar months written 
notice to that effect, which written notice shall not, however, be given prior to ................................20....

I already provided the Assignment and Assumption of the lease, to inform the lender that we assumed the landlord since February 2002.

The trucking company currently owns 100 trailers and a new client have requested 20 more for a total of 120 trailers for its project. The relationship with the new client is uncertain but at the same time it has potential for significant growth of the company. The uncertainty of the relationship may have an effect on the financial position of the client company. The additional trailers may be obtained by the trucking company through either a lease option or by direct financing. If the trucking company is considering leasing the additional trailers to provide to their new client they must first understand

The right-of-use model is favored among users of financial statements who believe it would eliminate existing structuring opportunities and would result in accounting for lease arrangements based on the substance rather than the form of the transaction. (Lugo, 2009).

The new theoretical change will increase transparency. The core principle of the new guidance is that lessees are obligated to recognize the assets and liabilities for leases with lease terms of more than twelve months, regardless of the classification as either financial or operating lease, on the balance sheet as a right-of-use asset and corresponding liability. The decision on whether lessees should consider accounting for leases on a yearly basis is fundamental and will be influenced by the management perception of the new regulations. However, it will tend to create complexity in accounting if an organization decides to account for leases for a longer period. That notwithstanding, it has to be noted that businesses have to make profits by cutting costs and this can be achieved via economy of scale

Under IFRS, lease classification depends on whether substantially all of the risks and rewards incidental to ownership of a