[Anonymous]

Under US GAAP lessor accounting, how do you distinguish a sales type lease from direct financing lease. I guess we need to distinguish the two in order to know how much gain to recognize. Do exam questions usually tell us directly which one it is?

PS. I understand that at a minimum level, we need to distinguish operating lease from sales type(financing lease).

[Neowarcloud]

If its about selling something its either a sales type or leaseback arrangement.

REG 8/12 - passed 79
BEC 7/13 - passed 84
AUD 8/13 - passed 83
FAR 11/13 - Passed 83

Now off to a new county...

[Neowarcloud]

If its about selling something its either a sales type or leaseback arrangement.

REG 8/12 - passed 79
BEC 7/13 - passed 84
AUD 8/13 - passed 83
FAR 11/13 - Passed 83

Now off to a new county...

[Anonymous]

If the present value of the minimum lease payments is greater than the carrying amount of the asset on the lessor's books, it would be a sales type lease because there is an initial profit. If the carrying amount of the asset is equal to present value of the minimum lease payments it is direct finance lease and lessor only makes money on collecting interest, not on difference between the carrying amount and the present value of the minimum lease payments, In a sales type lease they get and initial profit and also earn profit from the interest payments…in direct finance it is only on interest.

[Anonymous]

If the present value of the minimum lease payments is greater than the carrying amount of the asset on the lessor's books, it would be a sales type lease because there is an initial profit. If the carrying amount of the asset is equal to present value of the minimum lease payments it is direct finance lease and lessor only makes money on collecting interest, not on difference between the carrying amount and the present value of the minimum lease payments, In a sales type lease they get and initial profit and also earn profit from the interest payments…in direct finance it is only on interest.

[Author]

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