FINANCE LEASE

Right of Use Asset (RUA): COST MODEL LEASE LIABILITY

Components: Components: PV of
1. PV of lease payments 1. Fixed, Variable Payments
2. + Lease Bonus, - Lease Incentives Received 2. Purchase option IF CERTAIN TO EXERCISE
3. Initial Direct Cost (lessee) 3. Guarranteed Residual Value
4. Estimated Cost of Dismantling, Restoring 4. Penalties

NOTES: Measurement is the same as how PPE is measured. Discount Rate: (1)Interest Rate implicit to t

Depreciation: Purchase Option:

1. If there is transfer of ownership=USEFUL LIFE Exercise: Close Lease Liability at the end o
2. Exercise purchase option is certain=USEFUL LIFE Non-Exercise:
3. None of the two=USEFUL LIFE/LEASE TERM (LOWER) Recognize Loss on Finance Lease
Variable Payments
se option IF CERTAIN TO EXERCISE
nteed Residual Value

Rate: (1)Interest Rate implicit to the lease, (2) Borrowing Rate

Close Lease Liability at the end of lease term

Recognize Loss on Finance Lease: CA of RUA-Lease Liability, end