Intermediate-Accounting-課件

1、15-1Intermediate Accounting,17EStice | Stice | Skousen 2010 Cengage LearningPowerPoint presented by: Douglas Cloud Professor Emeritus of Accounting, Pepperdine UniversityLeases15-2Economic Advantages to Leasing Over Purchasing1. No down payment2. Avoid risks of ownership3. Flexibility1. Increased sa

2、les2. Ongoing business relationship with lessee3. Residual value retained15-3Simple Example Owner Company owns a piece of equipment with a market value of $10,000. User Company wishes to acquire the equipment. User Company can borrow $10,000 from the bank at 10% interest. Payments would be $2,638 ea

3、ch year for five years.(continues)15-4Simple Example User Company can lease the equipment from Owner Company for five years and make five annual “rental” payments of $2,638. Owner maintains title throughout. At the end of the lease, the equipment is no longer useful. Should Owner Company recognize a

4、n equipment sale when the lease is signed?(continues)15-5Simple Example Has effective ownership of the equipment been passed from Owner to User? Is the transaction complete? Is Owner Company reasonably certain the five annual payments can be collected from User Company?(continues)Key accounting issu

5、es for Owner Company15-6Simple Example On the date the lease is signed, should User recognize the lease equipment as an asset and the obligation to make the lease payment as a liability? The answer hinges on whether effective ownership, as opposed to legal ownership, of the equipment changes hands w

6、hen Owner and User sign the lease agreement.(continues)Key accounting issues for User Company.15-7The economic substance of this lease is that the lease signing is equivalent to the transfer of effective ownership, and the fact that Owner retains legal title of the equipment during the lease period

7、is a mere technicality.Simple ExampleThe arrangement should be treated as a sale by Owner and a purchase by User.15-8The lease agreement stipulates that Owner Company is to maintain legal title to the equipment for the 5-year lease period, but title is to pass to User at the end of the lease.Even th

8、ough this is a leasing arrangement, the transfer of title at the end indicates that this is in substance a purchase.Simple Example15-9The lease agreement stipulates that Owner Company is to maintain legal title to the equipment for the 5-year lease period, but at the end of the lease period User has

9、 the option to buy the equipment for $1.Offering the equipment to User Company for a bargain price at the end of the lease indicates that this is in substance a purchase.Simple Example15-10The useful life of the equipment is just five years. Accordingly, when the lease term is over, the equipment ca

10、n no longer be used by anyone else.Because the life of this asset and the lease term are the same, this arrangement is in substance a purchase.Simple Example15-11The present value of the lease payments equals the $10,000 market value of the equipment on the lease signing date.When the present value

11、of the lease payments equals the lease items market value, it is in substance a purchase.Simple Example15-12Capital vs. Operating Lease Capital leases are accounted for as if the lease agreement transfers ownership of the asset from the lessor to lessee. Operating leases are accounted for as rental

12、agreements.15-13Cancellation ProvisionsSome leases are noncancelable, meaning that these lease contracts are cancelable only on the outcome of some remote contingency or that the cancellation provisions and penalties of these leases are so costly to the lessee that cancellation will not occur.15-14B

13、argain Purchase OptionIf a lease includes a provision giving the lessee the right to purchase the leased property at a price that is expected to be considerably less than the fair value, the option is called a bargain purchase option.15-15Lease Term The lease term is the time period from the beginni

14、ng to the end of the lease. The beginning of the lease term occurs when the leased property is transferred to the lessee. The end of the lease term is at the end of the fixed noncancelable lease period plus all renewal option periods that are likely to be exercised.15-16Residual Value The market val

15、ue of the leased property at the end of the lease term is referred to as its residual value. Some lease contracts require the lessee to guarantee a minimum residual value. If the market value falls below the guaranteed residual value, the lessee must pay the difference.15-17Minimum Lease Payments Th

16、e rental payments required over the lease term plus any amount to be paid for the residual value are referred to as the minimum lease payments. Lease payments sometimes include charges for insurance, maintenance, and taxes on the leased property. These are referred to as executory costs.15-18Lease 1

17、 The implicit interest rate is used to discount the minimum lease payments to the fair market value of the leased asset at the inception of the lease. The lessor always uses the implicit rate to discount rental payments. The interest rate that the lessee could use to borrow the amount of money neces

18、sary to purchase the leased asset is the incremental borrowing rate.(continues)15-19Lease 1 The lessee uses the lower of the implicit interest rate or the incremental borrowing rate to compute present value of minimum lease payments.15-20Lease Classification Criteria1. The lease transfers ownership

19、of the leased asset to the lessee by the end of the lease term.2. The lease contains an option allowing the lessee to purchase the asset at the end of the lease term at a bargain price.3. The lease term is equal to 75% or more of the estimated economic life of the asset. 4. The present value of the

20、lease payments at the beginning of the lease is 90% or more of the fair market value of the leased asset.A lease is classified as a capital lease by the lessee if it is noncancelable and meets any one of the following criteria:15-21IASB ApproachIAS 17, “Accounting for Leases,” states simply: “A leas

21、e is classified as a finance (i.e., capital) lease if it transfers substantially all the risks and rewards incident to ownership.”This places the responsibility of distinguishing the type of lease on the accountant.15-22General Classification CriteriaLessee and LessorThe four general criteria that a

22、pply to all leases for both the lessee and lessor relate to transfer of ownership bargain purchase option economic life fair value of the leased asset15-23Lease ClassificationLessorAdditional revenue recognition criteria applicable to lessors:1.Collectibility of the minimum lease payments must be re

23、asonably predictable.2.Any unreimbursable costs yet to be incurred by the lessor can be reasonably estimated at the lease inception date.15-24Accounting for Operating LeaseLesseeThe lease terms for manufacturing equipment are $40,000 a year on a year-to-year basis. The entry to record the lease paym

24、ent for the year would be:Rent Expense40,000Cash40,00015-25The terms of the lease for an aircraft by International Airlines provide for payments of $150,000 a year for the first two years of the lease and $250,000 for each of the next three years. The total lease payments would be $1,050,000, or $21

25、0,000 a year on a straight-line basis. (continues)Operating Leases with Varying Lease Payments15-26Operating Leases with Varying Lease PaymentsThe required entries in the first two years would be as follows:Rent Expense210,000Cash150,000Rent Payable60,000The entries for each of the last three years

26、are as follows:Rent Expense210,000Rent Payable40,000Cash250,00015-27 Lease period: 5 years, beginning January 1, 2011, noncancelable Rent amount: $65,000 per year payable annually in advance; includes $5,000 to cover executory costs Estimated economic life of equipment: 5 years Expected residual val

27、ue of equipment at end of lease period: None(continues)Accounting for Capital LeasesLessee15-28Leased Equipment250,192 Obligations under Capital Leases250,192Lease Expense 5,000Obligations under Capital Leases60,000 Cash65,000 Accounting for Capital LeasesLessee(continues)15-29(continues)15-30Accoun

28、ting for Capital LeasesLesseeAmortization Expense on Leased Equipment 50,038Accumulated Amortization on Leased Equipment50,038 If normal company depreciation policy for this type of equipment is used, the amortization entry for 2011 is shown below:(continues)15-31Prepaid Executory Costs 5,000Obligat

29、ions under Capital Leases40,981Interest Expense19,019 Cash65,000 Accounting for Capital LeasesLessee15-32Accounting for Leases with a Bargain Purchase Option Frequently, the lessee is given the option of purchasing the property in the future at what appears to be a bargain price. The present value o

30、f the bargain purchase option would be added to the present value of the minimum lease payments to establish the initial asset and liability.15-33 There is a bargain purchase option of $75,000 exercisable after five yearsAccounting for Leases with a Bargain Purchase Option Lease period: 5 years, beg

31、inning January 1, 2011, noncancelable Rent amount: $65,000 per year payable annually in advance; includes $5,000 to cover executory costs Estimated economic life of equipment: 5 years Expected residual value of equipment at end of lease period: None15-34Present value of five payments at the beginnin

32、g of each year for five years:PMT = $60,000, N = 5, I = 10% $250,192Present value of the bargain purchaseoption of $75,000 at the end of 5 years:FV = $75,000, N = 5, I = 10% 46,569 Present value of minimum lease payment$296,761Accounting for Leases with a Bargain Purchase Option15-3515-36Obligations

33、 under Capital Leases68,182Interest Expense6,818Cash75,000To record exercise of bargain purchase option.Equipment148,381Accumulated Amortization onLeased Equipment148,380Leased Equipment296,761To transfer remaining balance inleased asset account to Equipment.Accounting for Leases with a Bargain Purc

34、hase Option15-37Accounting for Leases with a Bargain Purchase OptionIf the equipment is not purchased and the lease is permitted to lapse, the following entry is required on December 31, 2015:Loss from Failure to Exercise Bargain Purchase Option73,381Obligation under Capital Leases68,182Interest Exp

35、ense6,818Accumulated Amortization onLeased Equipment148,380Leased Equipment296,761.15-38Accounting for Purchase of Asset During Lease TermOn December 31, 2013, the lessee purchased the leased property in the Marshall Corporation example for $120,000. At that date, the remaining liability recorded on

36、 the lessees books is $114,545 and the net book value of the recorded leased asset is $100,078 capitalized value of $250,192 less $150,114 amortization ($50,038 3).(continues)15-39Given the facts in Slide 15-38, the entry to record the purchase on the lessees books would be as follows:Interest Expen

37、se10,413Obligation under Capital Leases104,132Equipment105,533Accumulated Amortization onLeased Equipment150,114Leased Equipment250,192Cash120,000$100,078 + ($120,000 $114,545)Accounting for Purchase of Asset During Lease Term15-40In 2011, Marshall Corporations income before any lease-related expens

38、es is $200,000. Net income for the year is computed as follows:Income before lease-related expenses$200,000Lease-related interest expense(19,019)Lease-related amortization expense (50,038) Net income$130,943Treatment of Leases on Lessees Statement of Cash Flows15-41Accounting for LeasesLessorDirect

39、financing leases involve a lessor who is primarily engaged in financing activities, such as a bank or finance company.Sales-type leases involve manufacturers or dealers who use leases as a means of facilitating the marketing of their products.15-42Revenue Generated by a Sales-Type LeaseA sales-type

40、lease generates two different types of revenue:1. An immediate profit or loss, which is the difference between the cost of the property being leased and its sales price, or fair value, at the inception of the lease2. Interest revenue earned over time as the lessee makes the lease payments15-43Accoun

41、ting for Operating LeasesLessorMinimum payment (in advance) including $5,000 executory cost $65,000/yearLease period (beginning Jan. 1, 2011) 5 yearsEconomic life of asset 10 yearsEstimated residual value at end of lease$0Implicit rate10%Incremental borrowing rate10%Cost to lessor$400,000Direct cost

42、s incurred $15,000(continues)15-44Accounting for Operating LeasesLessorTo record the payment of the initial direct costs and the receipt of the lease payment on January 1, 2011:Deferred Initial Direct Costs15,000Cash15,000Cash65,000Rent Revenue60,000Executory Costs5,000(continues)15-45Accounting for

43、 Operating LeasesLessorTo record the amortization of direct costs over five years and the depreciation of equipment over ten years using the straight-line basis:Amortization of Initial Direct Costs3,000Deferred Initial Direct Costs3,000Depreciation Expense on Leased Equipment40,000Accumulated Deprec

44、iation on Leased Equipment40,00015-46Accounting for Direct Financing LeasesRefer to Slides 15-27 and 15-28 for details concerning Marshall Corporations leasing arrangement with Universal Leasing Company. The cost of the equipment to Universal was the same as the fair value, $250,192 and Equipment Pu

45、rchased for Lease was charged when the equipment was acquired. Left click on the button to go to Slide 15-27, then type “46” and press the “Enter” key to return to this slide.(continues)15-47To record initial lease on January 1, 2011:Lease Payments Receivable300,000Equipment Purchased for Lease250,1

46、92Unearned Interest Revenue49,808Accounting for Direct Financing Leases(continues)To record first payment on January 1, 2011:Cash65,000Lease Payment Receivable60,000Executory Costs5,00015-48Accounting for Direct Financing LeasesTo record receipt of payment on December 31, 2011:Cash65,000Lease Paymen

47、t Receivable60,000Deferred Executory Costs (a liability)5,000Unearned Interest Revenue19,019Interest Revenue19,019(continues)15-49Lessor Accounting for Direct Financing Leases with Residual ValueAssuming the same facts as the last illustration, except that the asset has a residual value at the end o

48、f the 5-year lease of $75,000. Assume the cost to Universal Leasing Company was $296,761 (which is also its fair value).15-50Lessor Accounting for Direct Financing Leases with Residual ValueTo record initial lease on January 1, 2011:Lease Payments Receivable296,761Equipment Purchased for Lease296,76

49、1(continues)To record first payment on January 1, 2011:Cash65,000Lease Payment Receivable60,000Executory Costs5,00015-51Lessor Accounting for Direct Financing Leases with Residual ValueTo record payment on December 31, 2011:Cash65,000Lease Payments Receivable36,324Deferred Executory Cost5,000Interes

50、t Revenue23,676To record recovery of the leased asset on December 31, 2015:Equipment75,000Lease Payment Receivable68,182Interest Revenue6,81815-52Accounting for Sales-Type LeasesLessor If there is no difference between the sales price and the lessors cost, the lease is not a sales-type lease. The le

51、ssor will also recognize interest revenue over the lease term for the difference between the sales price and the gross amount of the minimum lease payments.15-53Accounting for Sales-Type LeasesLessor(3) Cost or carrying value of leased asset to lessorManufacturers or DealersProfit (Loss)(1) Minimum

52、lease payments(2) Fair value of leased assetFinancial Revenue (Interest)15-54Accounting for Sales-Type LeasesLessorFair value of equipment$250,192Lease period (beginning Jan. 1, 2011) 5 yearsEconomic life of asset 10 yearsEstimated residual value at end of lease$0Implicit rate10%PV of future lease p

53、ayments$250,192Cost to lessor$160,000Direct costs incurred $15,000(continues)15-55Accounting for Sales-Type LeasesLessor(1) Minimum lease payments: ($65,000 $5,000) 5$300,000(2) Fair value of equipment$250,192$49,808 (Interest Revenue)(3) Cost of leased equipmentto lessor, plus initial directcosts$1

54、75,000$75,192 (Mfr.s Profit)(continues)15-56Accounting for Sales-Type LeasesLessorLease Payments Receivable250,192Sales250,192Cost of Goods Sold175,000Finished Goods Inventory160,000Deferred Initial Direct Costs15,000Cash65,000Lease Payments Receivable60,000Executory Costs5,000To record entries on J

55、anuary 1, 2011:15-57 The minimum lease payments will include the following if they are part of the agreement: A lump sum (from a bargain purchase option) at the end of the lease term OR A guaranteed residual value The receivable is increased by the gross amount of the bargain purchase option or the

56、guaranteed residual value.Accounting for Sales-Type LeasesBPO or Guaranteed R/V15-58Accounting for Sales-Type LeasesBPO or Guaranteed R/VUsing the data from Exhibit 15-5, American Manufacturing offers a bargain purchase option of $75,000 at the end of five years.(continues)15-59Accounting for Sales-

57、Type LeasesBPO or Guaranteed R/VLease Payments Receivable296,761Sales296,761Cost of Goods Sold175,000Finished Goods Inventory160,000Deferred Initial Direct Costs15,000Cash65,000Lease Payments Receivable60,000Executory Costs5,000To record entries on January 1, 2011:15-60Accounting for Sales-Type Leas

58、esUnguaranteed R/VWhen a sales-type lease does not contain a bargain purchase option or a guaranteed residual value, but the economic life of the leased asset exceeds the lease term, the residual value will remain with the lessor. This is called an unguaranteed residual value.15-61Accounting for Sal

59、es-Type LeasesUnguaranteed R/VLease Payments Receivable250,192Sales250,192Cost of Goods Sold ($175,000 $46,569)128,431Finished Goods Inventory ($160,000 $46,569)160,000Deferred Initial Direct Costs15,000Lease Payments Receivable46,569Finished Goods Inventory46,569To record entries on January 1, 2011

60、:Compare the entries below with the ones on Slide15-56.Left click on the button to go to Slide 15-56, then type “61” and press the “Enter” key to return to this slide.15-62Sale of Asset During Lease TermIf the leased asset in Exhibit 15-8 below is sold on December 31, 2013, for $140,000 before the r