Section 2: 35–45%B7
Leases: Lessor Accounting and Advanced Topics
Exam Insight
ASC 842 brought nearly all leases onto the balance sheet, and BAR tests the harder side of the standard, including lessor classification, the right-of-use measurement, and sale-leaseback transactions that FAR only introduces. Getting the present-value mechanics and the five classification criteria right is essential because a single misclassification changes the entire pattern of income and expense.
CPA Exam Lab is an independent study resource and is not affiliated with, endorsed by, or sponsored by the AICPA® or NASBA. Practice questions are original content created for study purposes. “CPA” is a registered trademark of the AICPA.
What AICPA Wants You to Know
- 1Apply the five lease classification criteria from the lessee perspective.
- 2Measure the initial lease liability as the present value of lease payments and build the right-of-use asset.
- 3Distinguish finance from operating leases and their expense patterns for a lessee.
- 4Classify lessor leases as sales-type, direct financing, or operating.
- 5Account for sale-leaseback transactions, including when a sale has occurred.
- 6Prepare the journal entries and amortization schedules for a typical lease.