Handling Lessor Accounting and Sale-Leaseback Transactions

This chapter covers the lessor-side and transaction-side lease rules that candidates often underprepare. BAR questions here depend on classifying the arrangement correctly and then tracing the recognition, measurement, and reporting consequences.

In This Chapter

• Lessor Classification Criteria explains the standards used to determine the type of lease from the lessor perspective.
• Lease Income, Initial Direct Costs, and Residual Value covers the measurement issues that affect lessor reporting.
• Sale-Leaseback Arrangements explains the structure and accounting consequences of these combined transactions.
• Common Lessor and Sale-Leaseback Complexities focuses on the judgment points that create exam traps.

How to Use This Chapter

• Read this chapter when lease knowledge is strong for lessees but weak for lessor-side reporting.
• Focus on the classification outcome first, then on the income and measurement effects.
• Revisit it whenever a BAR case combines lease terms, transfer accounting, and transaction structure.

In this section

• Classifying Leases from the Lessor’s Perspective
  How BAR classifies leases from the lessor perspective under ASC 842.
• Measuring Lease Income, Initial Direct Costs, and Residual Value
  How BAR measures lessor income, initial direct costs, and residual value effects.
• Accounting for Sale-Leaseback Arrangements
  How BAR analyzes transfer accounting and lease consequences in sale-leaseback structures.
• Working Through Common Lessor and Sale-Leaseback Complexities
  How BAR handles exam-trap complexities in lessor and sale-leaseback fact patterns.