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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What must a lessee disclose for all leases whether classified as operating or finance?

To determine

Explain the things that a lessee must disclose for all the leases whether it is finance lease or operating lease.

Explanation

Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

Finance leases: In finance lease all the ownership risks and responsibilities are transferred from the lessor to the lessee.

Operating leases: In an operating lease lessor retains all ownership risks and responsibilities.

Things to be disclosed by lessee:

  • General information and description of lease.
  • In case the lease contains variable lease payments, lessee must disclose terms and conditions of such lease payments...

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