Lease Classification, Measurement, and Disclosure

This chapter covers lease accounting from both sides of the arrangement. FAR questions here often turn on the lease classification and the specific balance-sheet and income-statement effects that follow from that classification.

In This Chapter

• Lessee Accounting for Finance and Operating Leases covers the user-side accounting model.
• Lessor Accounting for Sales-Type, Direct Financing, and Operating Leases explains the owner-side treatment.
• Sale-Leaseback Transaction Accounting addresses combined transfer and lease arrangements.
• Lease Disclosure Requirements Under ASC 842 covers note requirements.

How to Use This Chapter

• Read this chapter after fair value and revenue if you want the transaction-measurement context first.
• Focus on what classification changes in the asset, liability, and expense pattern.
• Return here whenever a FAR miss involves lessee-versus-lessor logic or sale-leaseback treatment.

In this section

• Lessee Accounting for Finance and Operating Leases
  FAR coverage of ASC 842 lessee classification, right-of-use assets, lease liabilities, and expense patterns.
• Lessor Accounting for Sales-Type, Direct Financing, and Operating Leases
  FAR distinctions among sales-type, direct financing, and operating lease accounting for lessors.
• Sale-Leaseback Transaction Accounting
  FAR treatment for sale-leaseback arrangements, failed sales, financing treatment, and gain recognition.
• Lease Disclosure Requirements Under ASC 842
  FAR coverage of lease maturity analyses, weighted-average lease terms, discount rates, variable payments, and qualitative disclosure.