U.S. GAAP Codification of Accounting Standards

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U.S. GAAP Accounting Standards
Codification Topic 840-20: Operating Leases

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Codification Topic 840-20
Operating Leases


SFAS 13, November 1976
"Accounting for Leases"

Lease classification criteria
(A) Ownership transfer
--> Ownership is transferred by the end of the lease term
(B) Bargain purchase option
-> Lessee has an option purchase at the price lower than the fair value
(C) Lease term: 75% rule
--> Lease term ≥ 75% of economic life of the leased property
(D) Minimum lease payment: 90% rule
--> Present value of minimum lease payments > 90% of fair value of the leased property

Operating lease by lessee
A lease satisfies none of (A), (B), (C), (D)

Operating lease by lessor
1. A lease is classified as an operating lease by lessor
--> if it is not classified as one of the following:
(1) sales-type lease
(2) direct financing lease
(3) leveraged lease

2. Sales-type, direct financing, leveraged leases are explained in 840-30

Operating lease accounting by lessee
--> Rent is charged to expense by the lessee

Operating lease accounting by lessor
1. The leased property continues to be reported as an asset by the lessor
2. The leased property is depreciated by the lessor
3. Rent income is recognized by the lessor

International Financial Reporting Standards (IFRS)

   IAS 17: Leases

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   Codification Topic 840
Subtopics of Codification Topic 840
   840-10 Overall
   840-20 Operating leases
   840-30 Capital leases
   840-40 Sale-leaseback transactions
Accounting Terms of Codification Topic 840-10
   Bargain purchase option
   Bargain renewal option
   Capital lease
   Contingent rentals
   Direct financing lease
   Estimated economic life
   Estimated residual value
   Fair value of leased property
   Fiscal funding clause
   Heat supply (or burn-up) contracts
   Incremental borrowing rate
   Indirectly related to the leased property
   Interest rate implicit in the lease
   Lease inception
   Lease term
   Leveraged lease
   Minimum lease payments
   Noncancelable lease term
   Operating lease
   Reasonably possible
   Sales-type lease
   Significant influence
   Substantially all
Accounting Terms of Codification Topic 840-20
   Construction period lease payments
   Original lessee
Accounting Terms of Codification Topic 840-30
   Advance refunding
   Delayed equity investment
   Interest method
   Nonrecourse financing
Accounting Terms of Codification Topic 840-40
   Active use of the property
   Normal leaseback
   Profit or loss on sale
   Property improvements or integral equipment
   Sale-leaseback accounting
   Sale recognition
   Wrap lease transaction

   Other Topics at the Codification 800 
Accounting Standards Codification, ASC, Overview
ASC Codification Topic 805: Business Combinations
ASC Codification Topic 808: Collaborative Arrangements
ASC Codification Topic 810: Consolidation
ASC Codification Topic 815: Derivatives and Hedging
ASC Codification Topic 820: Fair Value Measurements and Disclosures
ASC Codification Topic 825: Financial Instruments
ASC Codification Topic 830: Foreign Currency Matters
ASC Codification Topic 835: Interest
ASC Codification Topic 840: Leases
ASC Codification Topic 845: Nonmonetary Transactions
ASC Codification Topic 850: Related Party Disclosures
ASC Codification Topic 852: Reorganizations
ASC Codification Topic 855: Subsequent Events
ASC Codification Topic 860: Transfers and Servicing

   U.S. GAAP Codification of Accounting Standards
Accounting Standards Codification, ASC, Overview
ASC Codification 200: Presentation
ASC Codification 300: Assets
ASC Codification 400: Liabilities
ASC Codification 500: Equity
ASC Codification 600: Revenue
ASC Codification 700: Expenses
ASC Codification 800: Broad Transactions
ASC Codification 900: Industry

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