Section 2: 35–45%B7
Leases: Lessor Accounting and Advanced Topics
Exam insight
ASC 842 put nearly all leases on the balance sheet, and BAR tests the harder side of the standard: lessor classification, right-of-use measurement, and the sale-leaseback transactions that FAR only introduces. Nailing the present-value mechanics and the five classification criteria matters because one misclassification reshapes the entire pattern of income and expense.
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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.