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23 Cards in this Set
- Front
- Back
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Lessee (buyer) capital lease criteria(GAAP) OWNS ( only need to meet one) |
O:ownership transfers at the end of the lease W: Written option for bargain purchase N: 90% of leased property FV<= PV of lease payments S: Seventy-five % or more of asset economic life is being committed in lease term. |
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Lessee capital lease criteria for IFRS OWESFACS |
O: transfer ownership W: Written bargain purchase price E: majority of economic lift S: substantially all of FV of the asset leased. F: Lessee bears the risk of the asset A: |
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Lessor meets all three criteria (LUC) |
L: lessee "owns" the leases property U: Uncertainty do not exist regarding any unreimbursable cost to be incurred by the lessor. C: collectability of the lease payments is reasonably predictable. |
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lessee capital lease accounting: the amount |
lessee record the lease as an asset and a liability at the lower of : a; FV of the asset at the inception of the lease B: cost= present value of the minimum lease payments |
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capitalize lease should exclude |
a. executory cost: insurance maintenance , taxes b. optional buyout (not required not bargain) |
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interest rate applied for minimum lease payment |
the lower of rate implicit in the leaseor lessee's incremental borrowing rate
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Depreciable life (GAAP) for Ownership transfer and written bargain |
the estimated economic life of the asset is used |
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Depreciable life for 90% and 75% |
lease life is used for depreciation |
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Depreciable life for IFRS |
use the short of economic life and lease term |
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lessor accounting for gross investment |
Lease payment + unguraranteed residual value = gross investment * PV = net investment gross invst- net invest = unearned inst revenue |
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rules for capital lease back |
a. operation lease: keep all gain b. capitalized lease : over 90% , keep all gain 2. 10-90% defer minimum payment 3. 0-10% ignore |
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Under IFRS capital lease back is |
gain is deferred and amortized over the lease term |
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bond issue cost |
should be capitalized and amortized using the straight line method. the company receive the proceed net of the cost |
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under GAAP the bond is amortized during the bonds outstanding |
Under IFRS the bond is amortized during contractual life of the bond |
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convertible bonds= nondetachable warrants |
using book value method or market value method ( non-gaap) |
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Book value method |
No I/S impact, all gain or loss is recognized |
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market value impact |
I/S impact. recognize gain or loss |
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bond extinguished before maturity |
gain or loss is generally record. |
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gains and losses for pension: corridor approach |
unrecognized gain or loss <10%of PBO or Market related value (greater)> divided by average remaining service life = amortzation of unrecognized gain or loss |
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amortzation of existing net obligation or net asset at implementation |
PBO = initial unfunded obligation divided by greater of 15 years or average employee job life (greater) = minimum amortzation |
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amortisation of transition obligation for APBO two options |
1. option to expense 2. 20 year or remaining years limit |
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Operating losses can be carry forward and back |
back for 2 year(no valuation allowance) and forward for 20 years (valuation allowance required) |
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Dividend income deduction (perm deduction) |
0-19% --70% deduction 20-80% ---80% deduction 80-100% ---- 100 deduction |
