Lease Modifications & Sale-Leaseback

Concept

Lease Payments Included

Fixed payments, variable payments based on index/rate, purchase options if reasonably certain, termination penalties, residual value guarantees. EXCLUDE variable payments based on performance/usage.

Key Point

Modifications

If adding distinct right of use at standalone price: separate lease. Otherwise: remeasure liability with revised discount rate and adjust ROU asset.

Concept

Sale-Leaseback

If transfer qualifies as a sale: derecognize asset, record ROU asset/liability, recognize gain only on rights transferred. If not a sale: financing transaction.

Lessee Accounting

Back to module →

Ready to test your knowledge?

Practice questions from this module to reinforce what you learned.

Practice Questions